Gold prices continued to fall in the first session of the week after new developments in the Middle East increased concerns about inflation and global interest rate outlook, while the USD and US bond yields remained high.
Spot gold prices at one point fell 0.7% to nearly 4,300 USD/ounce, extending the nearly 5% plunge last week. This is the strongest period of decline for the precious metal since the beginning of April.
Pressure on gold comes from the fact that energy prices continue to remain high, raising concerns that inflation will last longer than expected. This may cause central banks to maintain high interest rates or even continue to tighten monetary policy, a capital factor that is not favorable for gold because precious metals do not bring yields.
Ms. Rhona O'Connell – Head of Market Analysis at StoneX Group said that many uncertain factors in the market have not been completely resolved.
The view that gold prices still have a downward trend is gradually being confirmed. However, we are still closely monitoring the possibility of bottom-fishing buying in low price areas," she said.
Previously, in the last session of the week, gold wiped out the increase from the beginning of the year after the US jobs report gave results far exceeding expectations. This figure increased the forecast that the US Federal Reserve (Fed) may maintain a tough monetary policy stance for longer.
US Treasury bond yields and the USD simultaneously increased sharply after the US labor market showed better resistance than forecast. This is a factor that puts direct pressure on gold when the precious metal is valued in USD.
However, the market still recorded some long-term supporting factors. Investors are monitoring gold buying activities of central banks, especially in Asia.
The People's Bank of China added about 10 tons of gold to its reserves last month, the largest monthly purchase since 2024. This is also the 19th consecutive month that this agency has increased its gold reserves, showing that the accumulation demand of one of the world's largest gold buyers has not decreased.
As of 2:20 a.m. in Singapore, spot gold price decreased 0.5%, to 4,308.86 USD/ounce.
On the other precious metal market, silver prices fell 0.53% to 67.47 USD/ounce after losing nearly 10% last week. Platinum prices also went down, while palladium remained almost unchanged.
The Bloomberg Dollar Spot Index, which measures the strength of the USD, remained stable after increasing by 1.1% last week, continuing to put pressure on the precious metals market.
