Gold prices fell to their lowest since mid-July on Friday. Spot gold dropped 1 per cent to $3,980.40 per ounce as inflation worries grew. UBS analyst Giovanni Staunovo said, "Gold prices have been affected by a combination of two factors, the US GDP data and the increase in oil prices."
Synopsis
Gold prices fell to their lowest since mid-July on Friday. Gold rates were going down for a second straight monthly decline.
Gold rate, silver price fell today as both the precious materials had another tough trading session. Spot silver slid 3.6 per cent to $50.50 per ounce, platinum dropped 3 per cent to $1,443.69 and palladium 2.5 per cent to $981.31. All three metals were poised for weekly and monthly declines.
US gold futures rate for December delivery dropped 1 per cent to $3,991.10 per ounce. Spot gold rate fell 1 per cent to $3,980.40 per ounce, after hitting its lowest since July 17 earlier. Gold rate has fallen by 4.3 per cent so far for the month of October, as per a Reuters report.
Why is Gold Price Down?
Gold prices fell to their lowest since mid-July on Friday as rising crude oil prices and persistent inflation worries reinforced expectations of US interest rate hikes. Gold rates were going down for a second straight monthly decline.
Gold prices have been affected by a combination of two factors, the US GDP data, which came in stronger than expected, and the increase in oil prices putting pressure on the Fed to hike further interest rates, said Giovanni Staunovo, a UBS analyst.
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Data on Thursday showed US gross domestic product grew more than expected last quarter, while inflation accelerated in September as consumers paid more for gasoline and other goods, bolstering economists' expectations of a rate hike in December.
Oil prices climbed and were set for a fourth monthly gain as an attack on a tanker in the Strait of Hormuz highlighted continuing supply risks from the US-Israeli war on Iran. Higher energy prices strengthen expectations of a prolonged period of elevated interest rates, making non-yielding assets such as gold less attractive.
Gold Rate Prediction
Gold could climb to $5,000 or higher next year, as the US Federal Reserve will eventually have to cut rates again and inflation will no longer pose a problem, Staunovo said.
Major central banks hit pause on rate rises this week but made clear the tightening cycle isn't over, with the Fed and the European Central Bank both holding rates steady and pointing to inflation risks from surging energy costs.
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