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Concerns Persist as Gold Market Continues Lower

Updated on
  • New Multi-Week Low for Safe Haven Metal
  • COVID Concern Helps Stabilize Pricing
  • CPI and FOMC Key to Next Move

Gold prices have endured another challenging week as the commodities news remains rather downbeat relative to other areas of the economy. The precious metal market has reached a new multi-week low point around $1750 though prices have started to stabilize around that mark while the next key moments are ahead of the US CPI numbers to be delivered later today and the FOMC meeting next week that could be a key turning point for market sentiment based on the outcome. Silver is also lower below $23 as a stronger US Dollar continues to make waves for all precious metals. 

Gold Notches Multi-Week Low Again

Following on from a similarly difficult end to last week, gold prices have continued to slip with a significant fall overnight. Heading into the European session, gold is set to open close to $1750. The would represent another new multi-week low as the asset continues to struggle against a well-supported US Dollar. 

There are several factors at play, though predominantly the stronger Dollar is making life difficult for Gold and other precious metals. The fall of as much as 2.7% in prices on Thursday was a significant pullback for a market often viewed as one of the most consistent in terms of being a safe haven. Added together, these factors seem to be pointing to another weekly loss with the price down almost 2% on the week.

COVID Backstop Acting as Support

Even though it is ending up another torrid week for gold, it does have some support considering its position as a safe haven. This was evident yesterday as prices started to stabilize around the key mark of $1750. The prime factor here would seem to be the persistent Delta variant that states and countries are finding difficult to shake off. 

There has been mass testing in China and some other countries as cases continue to be discovered, while a number of states in the US continue to struggle under the weight of an increased case number. This is likely to keep the dollar strong but also acts as something of support for gold with its intrinsic value as a safe haven.

All Eyes on Next Data Release

The next big mover for gold and the wider commodities market is likely to be US CPI figures slated for release later today. This should give another picture of inflation in the country as many continue to insist that the window for Fed tapering is closing. 

Next week the FOMC meeting and its outcome will be critical in determining how the market sentiment shifts. In turn, this will be a much-awaited indicator for gold and other precious metals. Tapering or any similar decisions would likely work to extend the cautious environment which could favor gold, though a stronger dollar, as a result, may counteract with pressure on the metals market.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.