Gold prices remained stable on Thursday, as a strengthening dollar and fading hopes for lower short-term interest rates due to rising oil prices continued to weigh.
Hans-Pierre Merten | The image bank | Getty Images
Gold and silver fell on Tuesday as a global sell-off in technology stocks fueled by fears of rising interest rates rippled through the metals.
Gold Futures fell 1.3% to settle at $4,149.40 an ounce, while silver futures fell more than 5% to end the day at $62.07 an ounce.
Since the outbreak of war between the United States and Iran on February 28, gold’s reputation as a safe haven in times of turmoil has come under strain, with some of the drivers of its rise called into question.
A surprisingly hawkish Fed meeting chaired by Kevin Warsh last week reinforced expectations of a year-end interest rate hike, putting further pressure on gold prices as the prospect of higher interest rates tends to weigh on the underperforming precious metal.
Meanwhile, Wall Street also change your tone on gold, after several banks lowered their price forecasts for the metal following the first Warsh meeting.
Bank of America’s previous target of $6,000 per ounce of gold now appears unlikely as the inflation backdrop remains “uncomfortable,” likely leading to a tightening of monetary policy, its commodities strategist Michael Widmer wrote Friday.
Deutsche Bank wrote in a note published Tuesday that “hawks are chasing the bulls” in the gold market, revising its price target to $4,300 an ounce in the third quarter if the Fed remains unchanged, while highlighting the risk that three or four Fed hikes could send gold back to $3,800 an ounce.
