The dollar and Treasury bonds yield as the Federal Reserve takes a more aggressive stance to curb rising inflation. Gold prices fell in hectic trading on Thursday, due to a rise in the U.S. UU. And EE.
UU. The dollar offsets support for the precious metal with expectations that the Federal Reserve will curb its interest rate hikes after a policy meeting next week. The dollar rose 0.6% against its rivals after falling to a low of more than a month in the last session, making ingots less attractive to foreign buyers. The economy rebounded more than expected in the third quarter amid a decline in the trade deficit and returned to growth after a contraction in the first half of the year.
However, consumer spending was held back by aggressive Federal Reserve interest rate hikes. The central bank will increase its one-day benchmark interest rate by another 75 basis points in November. Rate hikes increase the opportunity cost of holding zero-yield ingots. In addition to the U.S.
Next week's U.S. Monetary policy meeting, investors will focus on Friday's US release. Personal income data for September, which will include the latest reading of an inflation measure followed closely by the Federal Reserve. Do you have any confidential news? We want to hear from you.
Get this in your inbox and learn more about our products and services. Currently, gold is falling because there is a change in the global approach to the Covid-19 pandemic. Originally, the uncertainty and policies surrounding Covid were detrimental to the markets, causing investors to flock to gold as a safe haven. .
As is to be expected, when demand for a commodity falls, the price will also fall with it and, as such, demand for gold has been declining. It's important to understand that the price of gold is falling, but also to examine the reasons behind the price movements. The emergence of compelling and rapidly growing new asset classes, especially cryptocurrencies, has raised questions about the popularity of traditional investments, such as gold. Gold is still too important an asset and a mature market to continue to fall until it is not wanted.
This is related to inflation, currency movements and ETFs, all of which have an impact on the gold market and therefore move the price of gold. Gold's performance during the year increased reserve portfolios, leading some central banks to identify an appropriate time to obtain liquidity to support their struggling economies, according to the WGC, while pointing out the reasons that led to the slowdown in gold purchases. However, the growth rate of investment in gold over the past 2000 years has not been significant, even though demand has exceeded supply. Lloyd admits that, while Bitcoin and some other cryptocurrencies could eventually serve as a hedge against inflation, just like gold, due to their limited supply, the price of Bitcoin is influenced by too many other external factors, such as regulatory concerns, the adoption of companies and the creation of their own digital assets by governments, such as the creation of their own digital assets to consider them a hedge against inflation right now.
While gold normally performs poorly in an environment of rising rates, sometimes that correlation doesn't apply. By not having to buy and hold gold bars, traders can continue to benefit from the continued rise in the price of gold and from any of the ups and downs in between. However, Credit Suisse said that the downside risk of gold is increasing, as it seemed to depend solely on demand from shelters. Now that the worst of the pandemic has passed and the markets have rebounded and recovered well, investors are no longer obsessed with obtaining safe assets and are looking to the other side of gold.
But Lloyd points out that cryptocurrencies are a “very speculative asset class”, while gold is a much safer and much less volatile alternative. There is a lot of macroeconomics that involves understanding the price of gold, and this makes sense, since gold is a mature and well-established asset in which to invest. .