Gold prices continued to fall amid increasing cautious sentiment in the global market, raising concerns about the prospects of safe-haven assets.
Spot gold prices at one point fell 1.2% to nearly 4,210 USD/ounce after losing 1.6% in the previous session. This development took place when the global financial market was affected by geopolitical instability and monetary policy expectations.
Recent fluctuations have made investor sentiment more cautious, while prolonging pressure on international commodity and financial markets.
Oil prices recovered on Wednesday, raising further concerns about global inflation. This makes it likely that central banks will maintain high interest rates or continue to raise interest rates – a factor that is detrimental to gold because the precious metal does not yield yields.
Previously, Brent oil fell 3% on Tuesday as signs of weakening demand partly compensated for concerns about supply.
Currently, gold prices are about 20% lower than the period at the end of February. The recent decrease caused gold to break through the 200-day moving average (MA200) - a long-term technical indicator that many institutional investors are monitoring, thereby triggering further selling pressure in the market.
In a newly released report, Ms. Suki Cooper - Global Commodity Research Director at Standard Chartered, said that the short-term outlook for gold is becoming more vulnerable as the risk of the US Federal Reserve (Fed) raising interest rates increases.
We expect gold prices to be more vulnerable in the short term as the outlook for raising interest rates rises," she said.
According to Ms. Cooper, if gold prices continue to fall, many investments in gold ETFs may fall into a loss-making state, thereby increasing the risk of deeper sell-offs in the market.
She said the next technical support zone for gold is around 4,100 USD/ounce. Although gold demand in India is weakening, China is still a bright spot as the domestic price difference remains stable below 10 USD/ounce.
As of 8:32 am in Singapore, spot gold prices fell 3.2% to 4,200.61 USD/ounce. On other precious metals markets, silver prices fell 0.87% to 64.76 USD/ounce, while platinum and palladium prices also went down. The Bloomberg Dollar Spot Index measuring the strength of the USD is almost flat.
