Gold prices fell on Monday with the increase in US Treasury bonds with expectations of interest rate hikes. The risk appetite, which increased with the hope of peace between Russia and Ukraine, further weakened the safe port charm of gold.
Margaret Yang: This is a negative factor for gold
Kriptokoin.comAs we have reported as, a diplomatic solution hopes to end the occupation of Russia in Ukraine led to a positive atmosphere in the stock markets and increased the trust of investors. This increased the risk appetite and reduced the demand for traditional secure port assets and applied pressure to valuable metal. Spot Gold was traded at $ 1,9762.85 with a decrease of 1.25 %at the time of writing. US gold futures decreased by 0.85 %to $ 1,968. DailyFX Strategist Margaret Yang explains the reasons for the gold price movement as follows:
One of the main reasons is increasing treasury interest rates. In addition, the market seems to be pricing the FOMC meeting on Wednesday, when the FED is preparing to start the tightening cycle. So this is a negative factor for gold.
Benchmark saw the highest level of a month with the widespread expectation that the US Federal Bank would increase interest rates by 0.25 %at a two -day meeting later in this week.
“It is not possible that gold will reach a record level in the short term”
The price of gold is very sensitive to rising US interest rates that increase the cost of opportunities for holding the ingredients that do not provide return. Global shares, which suppressed the safe port demand of gold, rose on Monday, hoping to breathe during the Ukrainian crisis, even while the conflicts continued. Margaret Yang makes the following assessment with referring to the negotiations between Russia and Ukraine:
Given the fact that both sides are willing to speak, I think that the worst of the Ukrainian crisis is probably behind. It is unlikely that the gold price will exceed the previous highest level of last week or reach a record level soon.
In addition to the FOMC meeting that will take place this week, Ukrainian updates and headlines from China will be important for a clearer gold price estimate.