Gold hits lowest level since March

Gold prices under pressure, Oil prices decline, Eyes on Jackson Hole

By Raed Alkhedr | @raedalkhedr | 18 August 2023

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  • Gold prices pinned near $1894

  • Markets wait for Powell's statements due next week

  • Oil continues to decline amid fears of a slowdown in China's economic growth

Gold sees profit-taking action

Gold stabilized away from its lowest levels since March on Friday as the dollar and bond yields decreased, heading for a third consecutive weekly decline as strong US economic data renewed expectations that the US Federal Reserve will maintain higher interest rates for a longer period.

Spot gold rose by 0.1% to $1,890 per ounce after reaching its lowest levels in five months yesterday. Meanwhile, gold futures rose by 0.3% to $1,920 per ounce.

Gold's slight gains come in the absence of important economic data since it sharply declined following the minutes of the US Federal Reserve meeting last Wednesday. Most members confirmed the need to continue with high interest rates for a longer period to control inflation, which is still far from desired levels.

Markets are looking forward to Federal Reserve Governor Jerome Powell's speech at the Jackson Hole Symposium next week. Gold may decline again if Powell confirms the stability of the US economy and that current conditions warrant a tightening of monetary policy.

US Treasury bond yields for 10 years decreased from their highest levels since October, boosting demand for the yellow metal, bringing it closer to the $1,900 per ounce level again.

Oil is heading for a weekly loss

It appears that oil prices are heading for their first weekly loss in seven weeks, as disappointing data from China raises concerns about a global demand decline.

This comes as factory activity in China stumbles, real estate growth slows, and producer price growth decelerates. This confirms the ongoing pressures facing the world's largest oil importer and consequently the decline in prices in the upcoming period.

The price increase lasted for seven weeks, driven by supply cuts by OPEC+, the longest streak for both benchmark crudes this year. Brent crude futures rose by about 18%, and West Texas Intermediate crude rose by over 20% in the seven weeks ending on August 11, with prices reaching their highest levels in months. However, global oil prices have returned to decline again during this week's trading, surpassing losses of about 3%.