Precious metals markets have been shaken over the past few weeks as gold prices hovered below $1,700 an ounce, hitting six-week lows. Silver fell in the $18 range to $17.80 an ounce. In 24 hours, both gold and silver cooled from 0.85% to 0.89% against the US dollar, platinum fell 2.82%, and palladium closed at USD 4.18 in the final session.
Despite global inflation, gold will not be a safe haven in 2022
With the entire world suffering from red-hot inflation, many consider the world’s precious metals to be a safe haven against inflation. Although U.S. and Eurozone inflation rose above 9 percent this summer, this was not the case in 2022.
In the year In 2022, an ounce of fine gold could reach a lifetime value of $2,070 per ounce against the US dollar. On the same day (March 8, 2022), an ounce of silver hit its 2022 high at $26.46 an ounce.
On January 1, 2022, silver was trading at 23.16 nominal US dollars, so year-to-date, silver has depreciated by 23.14 percent. Since its peak on March 8, 2022, silver has fallen 32% against the nominal US dollar per troy ounce. Price. On January 1, 2022, the nominal US dollar price of gold per troy ounce was $1,827.49 per ounce and today at $1,695.45 per ounce, gold has decreased by 7.22%.
Additionally, any investors who bought gold at its lifetime high on March 8 lost 18.09% of the US dollar’s value since that date. Platinum, palladium and rhodium values have shown similar declines and even greater volatility than gold and silver.
Precious metals (PMs) have long played a key role in the global economy and have traditionally been seen as a hedge against inflation in PMs like gold and silver. However, this was not the case in 2022, and the blame is looming on a strong greenback and the Federal Reserve hiking interest rates.
Analysts say strong dollar, hawkish Fed point to lower gold prices, dollar index hits 20-year high.
“A more hawkish Fed, higher real interest rates and a stronger US dollar, both of which will lower gold prices,” Przemslaw Radomski, CEO of investment advisory firm Sunshine Profits, told Forbes in late June. “A strong US dollar and a renewed rally in global bond yields have dragged down gold prices,” said Justin McQueen, market strategist at dailyfx.com.
Fxstreet.com analyst Dwani Mehta explained on Thursday that if gold bears dominate the market, gold prices could fall further. “Technical breakout shows that gold price is gathering strength for the next push. Bears are looking for a pivot point at the one-day S2 at $1,700,” Mehta wrote on September 1. The fxstreet.com analyst added:
If sellers find a strong position below the latter, a one-day S3 selloff at $1,688 towards the pivot point is inevitable.
David Meagher, director of metals trading at High Ridge Futures, blamed gold’s poor performance on Federal Reserve Chairman Jerome Powell’s remarks at the Jackson Hole Symposium last week.
“There is continued pressure on gold from Powell’s comments last week. [the] Expecting a more aggressive federation,” Meagher said. “Gold being a non-interest bearing asset will have more competition.”
Moreover, the US dollar index hit a 20-year high of 109.592 on Thursday, and the reason behind the strong greenback was placed on the aggressive Fed, according to a Reuters report published on September 1.
What do you think of the precious metals market action in recent weeks? Let us know what you think about this in the comments section below.
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