Precious metal markets have been shaken in recent weeks, with gold ounce prices approaching six-week lows, hovering just under $1700 per unit. Silver fell below the $18 level to $17.80. Both gold and silver fell between 0.85% and 0.89% against the U.S. dollar in the past 24 hours, while platinum and palladium dropped 2.82% and 4.18%, respectively.
In 2022, despite global inflation, gold was not a safe haven
While the entire world was suffering from red-hot inflation, many would have assumed that the world’s precious metals were a safe haven against soaring prices. Such was not the case in 2022, even though inflation in the U.S. and Eurozone exceeded 9% this summer.
In 2022, an ounce of pure gold hit a lifetime high against the U.S. dollar ofdollars per ounce, at $2,070 per ounce. On the same day (March 8, 2022), one ounce of silver hit a 2022 high at $per ounce; $26.46 per ounce
Since the beginning of the year, silver has fallen 23.14% and was trading at a nominal USDper troy ounce on January 1, 2022. nominal USDper troy ounce on January 1, 2022 was $23.16. since the March 8 high, silver has 32% below the nominal U.S. dollar value per ounce; the nominal U.S. dollar value per troy ounce of gold on January 1, 2022 was$1,827.49,and in today’s value per ounce, gold is down 7.22%.
Additionally, investors who purchased gold at its lifetime high on March 8 have lost roughly 18.09% of its U.S. dollar value since that date. Platinum, palladium, and rhodium valueshave been even more volatileas they have declined in value, as have gold and silver.
Precious metals (PMs) have long played an important role in the global economy. Traditionally, PMs such as gold and silver have been seen as a hedge against inflation. However, this is not the case in 2022 and is attributed to the strong greenback and the Federal Reserve’s interest rate hikes.
Analysts say dollar strength, Fed’s hardline stance could depress gold prices; dollar index hits 20-year high
Přemyslav Radomsky, CEO of investment advisory firm Sunshine Profit, said in Juneat the end of June. Forbes noted at the end of June that “a hawkish Fed and a stronger dollar, which means higher real interest rates, both mean lower gold prices,” said Justin McQueen, market strategist at dailyfx.com,and. “A firm U.S. dollar and a renewed rise in global bond yields dragged gold prices down.”
fxstreet.com analyst Dhwani Mehta,on Thursday, explained that gold prices could fall further from here if the gold bears take control of the market. Mehta wrote on September 1: “Technical confluence detectors indicate that gold prices are gathering strength for the next push lower, with bears targeting the $1700 pivot point 1-day S2.” fxstreet.com analysts add:
If sellers find a strong foothold below the latter, a sharp sell-off toward the $1688 pivot point 1-day S3 would be inevitable.
David Meagher, metals trading director at High Ridge Futures,attributes gold’s poor performance toFederal Reserve Chairman Jerome Powell’s remarks at last week’s Jackson Hole Symposium.
“Chairman Powell’s comments last week raised expectations for a more aggressive Fed, which has continued to put pressure on gold,” Meger said.”
“As a non-interest-rate asset, gold will face more competition,” he said.
Additionally, the U.S. dollar index hit a20-year high of 109.592 on Thursday, according to a Reutersreportpublished on September 1,and the greenback’s strength is due to the aggressive Fed placed, according to the report.
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