Decline in ounce gold prices: Impact of oil, dollar, and the Fed
The rise in oil prices, the strengthening of the dollar, and expectations regarding the Fed's interest rate policy are causing ounce gold to lose value for the fourth consecutive day.
Ounce gold has lost value for the fourth consecutive trading day due to the rise in oil prices, the stabilization of the dollar, and expectations regarding the US Federal Reserve's (Fed) interest rate policy. As of 07:15 on October 21, ounce gold was trading at $4,124.10, while gram gold was recorded at a selling price of 6,575.25 TL.
Risks to maritime transport in the Red Sea and threats to Saudi Arabia's oil infrastructure are increasing energy supply concerns, pushing oil prices higher. This situation strengthens expectations that inflationary pressures will persist and that central banks may keep interest rates high. Bas Kooijman, manager at DHF Capital SA, stated that this prospect of tight monetary policy is pressuring gold, which does not provide interest yields.
Markets are awaiting the Fed's meeting on October 27-28 and the Personal Consumption Expenditures (PCE) data to be released in the US. According to CME FedWatch data, the probability of an interest rate hike in October is priced at 16 percent, and at 90 percent for December. Ilya Spivak from Tastylive noted that if the expected interest rate hikes for next year do not materialize, gold prices could rise again.
From a technical perspective, for ounce gold to recover, it needs to surpass the resistance zone between $4,147 and $4,176. The stabilization of the dollar index also stands out as another factor making it difficult for gold, which is priced in dollars, to rise.