Gold quotes on the world market dropped below $1.9 thousand per troy ounce

Gold prices on the world market dropped below $1.9 thousand per troy ounce, hitting a new six-month minimum. In many ways, the bearish game is associated with the expectation of a Fed rate hike, which leads to an increase in Treasury yields and reduces the attractiveness of the precious metal. Thus, international investors reduced investments in gold, as a result of which the assets of exchange-traded funds reached their minimum since March 2020. However, analysts expect that the further decline in metal prices will not be significant.

The price of gold on the global spot market on September 27 dropped below $1.9 thousand per ounce. According to Investing.com, quotes for the precious metal reached $1,877.87 per ounce, thereby updating the minimum since March 13. Since the beginning of the week, the precious metal has lost almost 2.5% in price.

Gold prices are declining against the backdrop of an even stronger fall in the prices of other precious metals. Thus, the price of silver reached $22.55 per ounce, which is 4% lower than the end of last week. Platinum quotes fell by 3.7%, to $891.9 per ounce, palladium lost 2.6% in price, and its quotes rolled back to $1,218.9 per ounce.

Bearing in the precious metals market occurs against the backdrop of increased expectations of a Fed rate hike. Last week, the American regulator, as expected by most analysts, left the rate at the same level of 5.25–5.5%, but did not rule out raising it before the end of the year. According to Digital Broker analyst Daniil Bolotskikh, the price of the precious metal is influenced not only by expectations for a further, but also a longer cycle of tight monetary policy in the United States.

International investors are actively moving from gold to US Treasury bonds, whose yields are reaching multi-year highs. On Wednesday, the yield on ten-year US Treasuries approached 4.6% per annum for the first time since the fall of 2007, having added more than 50 basis points since the beginning of the month. Such profitability, as noted by Dmitry Scriabin, portfolio manager of Alfa Capital Management Company, makes investments in other asset classes, including gold, which does not generate interest income, less attractive.

At the same time, according to the agency Bloomberg, since the beginning of the week, the assets of ETFs investing in the precious metal have decreased by another 4.6 tons, to 2755.7 tons, which is the minimum value since March 2020. Over four months, assets decreased by more than 172 tons, and since the beginning of September alone, the decrease was over 37 tons.

On the Moscow Exchange, the price of gold on the spot market dropped to 5.79 thousand rubles/year. This is 1.7% below Friday’s close. However, quotes only returned to the values ​​​​of two weeks ago. A less dramatic drop in ruble prices is associated with the dynamics of the dollar exchange rate.

Despite the local decline in the price of gold, the interest of Russian private investors remains at a high level, notes Philip Orinich, a personal broker at BCS World of Investments.

This is primarily due to the protective nature of investments in gold in the context of a weakening ruble exchange rate. “This is an instrument in which investments in which helped us survive the crisis of 1998, the crisis of 2008, and all subsequent falls in the stock market without problems,” notes Mr. Orinich.

Further dynamics of gold prices on the world market will depend on the decision of the US financial authorities, notes Dmitry Scriabin. However, market participants do not expect a significant decline in quotes. According to Daniil Bolotskikh, even taking into account the rise in US government bond yields, gold prices will not fall below $1.85 thousand per ounce. Quotes will be supported by high interest in the metal from central banks of various countries. The potential increase in inflation, Mr. Bolotskikh notes, will spur investments by institutional and private investors in a protective asset in the form of gold.

Vitaly Gaidaev