Fifth month of decline for gold under pressure from interest rates

With losses both on a daily and a monthly basis, gold finished the trading of August, which shows that it cannot face the pressures exerted on it by the tightening of the monetary policy and the strengthening of the dollar.

In particular, the gold contract for December delivery closed today at $1,726.2 the ounce with losses 0.6% or $10.1.

For the whole of August, based on the most active December contract, the price of gold recorded losses 3.1%.

“The Fed shows no intention of easing policy significantly in the near term. They continue to focus on inflation, and what they may want to do may be to create even more conflicting expectations around their policy, for which they will give less clear forward guidance “, estimates Ilya Spivak, currency analyst at DailyFX.

According to him, the strength of the dollar also contributes to the weakness of gold.

On the interest rate front, New York Fed chief John Williams said yesterday that the US central bank would need to raise interest rates to “somewhere above 3.5%” and keep them at that level until the end 2023.

For her part, Cleveland Fed President Loretta Mester appeared even more hawkish today, saying she expects the cost of federal borrowing to rise above 4% by early 2023.

It is recalled that although gold is traditionally seen as a refuge against inflation, interest rate increases on the one hand increase the opportunity cost of the precious metal, on the other hand they strengthen the dollar making the metal more expensive for holders of other rates.

Otherwise, the trend in metals in general was down in August, with silver to lose 2.1% and its price at $17.8 an ounce, having recorded a monthly plunge 11.5%.

The palladium fell to $2,078 down 0.4% today and 2.4% for the month, platinum lost 0.6% today to $827 and monthly losses 7.1%as well as copper which posted daily losses of 0.9% to $3.518 a pound and monthly 1.5%.