World Gold Price Dropped This Wednesday Morning

On Wednesday morning, western Indonesian time (WIB), world gold prices fell to a level of USD 2,000. This happened because the US economic data did not meet expectations. It was supported by the fact that the Federal Reserve (The Fed) encouraged the possibility of delaying interest rate cuts.

According to money.kompas.com, CNBC explained that the price of gold on the market was at the level of USD 1,990.89 per ounce. This figure shows a decrease of the spot down 1.47 percent.

The latest data from the United States shows that the increase in retail sales in that country fell short of expectations. The United States Department of Commerce reported that retail sales rose 0.4 percent in April 2023. This figure is lower than the estimated increase of 0.8 percent.

Even so, the underlying trends in retail sales remain solid. This pushed the USD up and sent the US government bond yields to their highest in two weeks.

Cleveland Fed Chair Loretta Mester also give his opinion on this matter. He said that the US central bank was not at the point of keeping interest rates steady. This is seen with a certain period of time. So it is necessary to consider other signs.

“We need to see more signs of a pivot from the Fed, and we haven’t fully seen it yet,” said Senior Market Analyst Craig.

As is known, gold is very sensitive to interest rate policy. The trend of high interest rates will weaken its appeal. So when interest rates rise, non-yielding gold becomes unattractive to investors. Different from bonds and stocks which do provide returns.