Global gold prices fell during these moments of trading today, Thursday, in conjunction with the rise of the US dollar, as the strengthening of the dollar makes gold more expensive for holders of other currencies, which reduces demand.
Despite the decline in gold prices, the bullion remained close to record highs as traders await more economic data from the United States that could boost hopes of a rate cut in mid-year by the Federal Reserve.
Investors are awaiting US retail sales data, the producer price index report, and jobless claims due out later today to gauge the state of the US economy and whether this will prevent the Federal Reserve from cutting interest rates in June.
The Federal Reserve is scheduled to release its latest interest rate forecasts at next week’s monetary policy meeting. The December meeting had expected a three-quarter point rate cut in 2024.
An American interest rate tracking tool available on the Investing Saudi Arabia website shows that markets are 99% and 93% likely to keep the Fed’s rates on hold at the March and May meetings, respectively, compared with a 63.9% increase in investor expectations for the central bank to start cutting borrowing costs in June, compared to 55.2% a week ago.
Gold and Dollar Now
Gold futures are now down 0.4% to $2,172 an ounce. While spot gold futures are down around 0.26% to $2,168 an ounce. On the other hand, the US dollar index is now up 0.11% to 102.515 points.
Other Metals
Platinum fell 0.3% in spot trading to $935.50 an ounce, while palladium fell 0.3% to $1,056.24. Silver fell 0.3% to $24.95, after hitting its highest level in more than four months earlier in the session.
Oil Prices Rise Supported by Lower US Inventories and Attacks on Russian Refineries
Oil prices rose in Asian trading on Thursday, supported by strong US demand after gasoline stocks fell to their lowest level in three months and crude stocks fell unexpectedly as concerns about supplies persisted following Ukrainian drone strikes on Russian refineries.
The two benchmarks rose about 3% to their highest level in four months on Wednesday on expectations of higher US demand and escalating geopolitical risks. The US Energy Information Administration said yesterday, Wednesday, that gasoline stocks fell for the sixth consecutive week, falling 5.7 million barrels to 234.1 million barrels, the equivalent of three times the forecast of a 1.9 million barrel decline.
US crude stocks also fell unexpectedly as refinery utilization rates rose. In a boost to demand, the United States bought about 3.25 million barrels of crude for the country’s strategic oil reserve for delivery in August. Meanwhile, Ukrainian drone strikes on Russian refining facilities continued for the second day on Wednesday, causing a fire at Rosneft’s largest refinery, in one of the most serious attacks on the Russian energy sector in recent months.
Russian officials said that the day after extensive damage to a Lukoil refinery in Nizhny Novgorod, Ukrainian drones targeted refineries in the Rostov and Ryazan regions. In Ryazan, a drone attack caused a fire at a Rosneft refinery. Two sources familiar with the situation told Reuters that the refinery was forced to shut down two main oil refining units.
World Gold Council Clarifies the Chances of Bitcoin Threatening the Yellow Metal
In light of the recent rise in the price of Bitcoin, and talk about the digital currency being an alternative to the precious metal gold, Andrew Naylor, Head of Public Policy at the World Gold Council, said in a television interview with Sky News that gold prices have risen by up to 7% in the past week, and demand for gold is still strong, especially with the approach of the US rate cut.
The international official pointed out that all eyes are currently on the US Federal Reserve and the expected rate cut decision, but he believes that the recent economic data may indicate that the Fed is approaching a rate cut, which in turn could boost gold prices, along with the escalation of global geopolitical tensions.
On the other hand, the Head of Public Policy at the World Gold Council spoke about the relationship between gold and the digital currency Bitcoin, saying that Bitcoin may affect gold but cryptocurrencies are not real assets and are somewhat linked to the stock markets, and carry a great deal of risk. Therefore, investing in cryptocurrencies, especially Bitcoin, may carry some risks, and therefore gold may be resorted to as a safe haven and to reduce risk. Therefore, Bitcoin is not considered a safe haven and does not pose any threat to gold in any way.
It is noteworthy that earlier, a leading investor in cryptocurrencies, particularly Bitcoin, Michael Saylor, stated in a press interview with CNN that Bitcoin is undoubtedly at least the equivalent of digital gold today. Saylor added that Bitcoin will eliminate gold, especially since it possesses all the great qualities of gold without any of its drawbacks.
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