Positive turn in global gold prices in 5 months

The US dollar rose again on Friday after hitting its lowest level in more than a month on the previous trading day. As a result, gold prices fell 2 percent. However, as the risk of further interest rate hikes in the United States due to the downward inflation index has reduced, gold is set to see gains at the end of the month for the first time in five months. Reuters reports.

Spot gold prices fell 1.3 percent to $4,049.83 per ounce at 11:40 pm Bangladesh time on Friday (July 31), which had fallen as much as 2 percent earlier in the day. US gold futures for delivery in August fell 1.3 percent to $4,107.

However, despite the decline, gold prices have risen 1.1 percent so far this month, which is the highest monthly increase since February.

This increase in prices is mainly due to the downward inflation index. That has led traders to reduce expectations for a Federal Reserve rate hike this year. Oil prices have also fallen to pre-Iran war levels, a major factor.

The precious metal is struggling to consolidate above the psychological $4,000 mark, despite snapping a four-month losing streak, said Han Tan, chief market analyst at Bybit.

He added that gold has held above $4,000 on hopes that Fed Chairman Kevin Warsh will not limit the central bank's focus to just controlling inflation and raising interest rates.

Data released on Thursday showed that U.S. inflation eased slightly in June. But the relief is likely to be temporary as oil prices surged amid renewed tensions in the Middle East. Warsh this week reiterated his unwavering commitment to reducing inflation without hinting at a rate hike.

The dollar has held steady after falling about 2.4 percent on Thursday, its biggest one-day drop since January 2023. A strong dollar makes buying gold more expensive for holders of other currencies.

Traders see a 65 percent chance of a September interest rate hike, down from more than 80 percent a week ago, according to the CME FedWatch tool.

Meanwhile, China’s market regulator in a statement on Friday urged solar power companies not to engage in “unhealthy” price competition. Silver is a key industrial metal used in solar photovoltaic panels.

Meanwhile, spot silver prices fell 2.1 percent to $57.76 an ounce in the international market. Platinum fell 0.6 percent to $1,650.14 and palladium fell 1.8 percent to $1,281.18. However, despite the decline in prices, both metals are on track for gains at the end of the month.