Opening the trading session on June 22, world gold prices traded at a high level around 4,220 USD/ounce, but the upward momentum quickly weakened when demand was not strong enough to maintain this price range.
On June 23, gold prices went sideways in a narrow range, from 4,180 - 4,200 USD/ounce, showing that market sentiment is waiting for a clearer signal from the macroeconomy.
Real pressure erupted on June 24 when a strong sell-off pushed prices plunged from about 4,180 USD/ounce to the bottom of 3,960 - 3,970 USD/ounce in just a few hours of afternoon trading - a decrease recorded at nearly 220 USD/ounce in one session. This is the lowest level in nearly 8 months, reflecting negative sentiment that is covering the precious metals market.
Stepping into the morning of June 25, world gold prices had a technical recovery momentum to around 3,998 - 4,005 USD/ounce, but are still struggling against the important psychological threshold of 4,000 USD/ounce.
According to Trading Economic, there are two macroeconomic factors that are completely dominating the short-term trend of gold. First, the USD has risen to its highest level in more than a year against other currencies, making gold - which is valued in USD - more expensive for foreign investors and indirectly pulling demand down.
Second, expectations that the US Federal Reserve (Fed) will raise interest rates are rising sharply after Chairman Kevin Warsh issued a tough signal on inflation at last week's meeting. The market is currently assessing the possibility of interest rate hikes in September, with the possibility of further increases before the end of the year - a direct disadvantageous scenario for gold because this metal is not profitable and less attractive when interest rates are high.
Notably, progress in US-Iran peace talks has pulled oil prices back to pre-conflict levels and significantly reduced inflationary pressure - a factor that once supported gold as a safe haven asset. However, this positive impact has been completely overwhelmed by monetary policy concerns.
