Gold prices are on track to record the worst monthly loss in five years

Mohammed Abdelkhalik
June 30, 2021
Gold prices

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Gold Prices Outlook – 5th July 2021

Gold prices fell during today’s trading session in the European market, to continue its daily losses for the third consecutive session, about to touch its lowest level in two months, which it reached earlier in the last session.

Recording a monthly loss, the largest since November 2016, and investors are awaiting the US jobs data at a later time to get more clarity on the Federal Reserve’s stance on policies, especially after it raised expectations of rising interest rates and inflation in the United States.

Gold prices down

At 09:45 GMT, the spot price of gold was down by 0.5%, to trade around the level of 1753.27 US dollars per ounce, from the opening level of today’s session at 1761.36 dollars, and reached the highest price at 1764.67 dollars per ounce.

Gold in US futures fell by 0.3%, to $1,757.80 an ounce.

At the conclusion of yesterday’s trading, the precious metal “gold” lost 1% in the second consecutive daily loss, thus recording its lowest level in two months at $1750.58 an ounce.

Gold prices

And over the course of the transactions of the current month of June, which officially ends at today’s settlement, gold prices are down so far by about 8%, approaching towards recording the first monthly loss in the last three months, and the largest monthly loss in percentage since November 2016.

As for the US dollar index trading, the index rose during today’s session by about 0.1%, for the third consecutive daily gain, reflecting the continued purchases of the US currency against most major and minor currencies, which currently negatively affects the price movements of gold and other metals priced in dollars.

This rise is supported by the dollar’s purchases as the best alternative investment in the other foreign exchange market, especially in light of the increasing indications that the Federal Reserve will tighten monetary policy in the United States sooner than expected.

Federal Reserve forecast

The US Federal Reserve this month moved its forecast for the first increase in US interest rates after the Coronavirus pandemic to 2023 and indicated the improvement in the health situation in the country, and the Board also emphasized that progress towards employment and inflation goals is happening somewhat faster than expected.

The expectations for the month of June indicated that US interest rates would rise to a rate of 0.6% during the year 2023, which means raising them twice by 25 basis points during this year 2023, and the expectations of last March had recorded a rate of 0.1%, and the number of members of the Monetary Policy Committee increased who expect to raise interest rates in 2023. to thirteen members compared to seven members during the previous meeting.

As we know that raising US interest rates leads to an increase in the opportunity cost of acquiring the non-yielding yellow metal, which reduces its attractiveness.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.