Gold Price Exits From Level USD 2000

The price of gold is breaking out of the psychological level of USD 2,000. Based on the close of trading on Monday, gold closed at USD 1989.65 per troy ounce. The price of the precious metal weakened by 0.91% (10/4/2023).

According to cnbcindonesia.com, This weakening extended the negative trend of gold which has weakened since last Thursday. In two trading days, the price of gold fell by 1.52%. However, the price of gold slightly strengthened this morning. Now the price of gold is in the position of USD 1991.03 per troy ounce (11/04/2023).

The weakening of gold cannot be separated from market concerns about the US central bank The Federal Reserve (The Fed) policies. Concerns increased after the US employment data did not fall as expected. The US unemployment rate hit 3.5% in March 2023. Slightly lower than 3.6% in February 2023.

The drop in the unemployment rate is clearly worrying the market. This condition could be a signal if US employment data is still volatile. Another condition is that inflation has not come down as fast as the Fed’s expectations.

Inflation is one of the main considerations for the Fed in determining interest rates in May. If inflation does not improve, it is not impossible that the Fed will remain hawkish.

“Expectations of an interest rate increase are still very high and that makes gold fall even more,” said Daniel Pavilonis, analyst at RJO Futures, as quoted by Reuters.

Market expectations now show that 72% of market participants expect the Fed to raise its benchmark interest rate by 25 bps in May. Compare that to last week where the figure was only 43%.

Expectations of an increase in the Fed’s benchmark interest rate have made the US dollar stronger again. The dollar index this morning was moving at 102.5. This movement became the strongest in five trading days.