BY ONOME AMUGE
Gold recorded an upward swing in the closing session of the week as the dollar lost its bullish direction, falling 0.2 percent to boost gold’s safe-haven appeal. Rising interest rates, however, constrained the yellow metal to a weekly dip.
Spot gold was up 0.4 percent to $1,830.22 per ounce, after earlier touching a one-week low of $1,816.10. U.S. gold futures also settled higher at $1,830.3 per ounce.
Commenting on gold’s price movement, Daniel Ghali, commodity strategist at Canadian investment firm,TD Securities, said a confluence of forces is driving gold prices in bullish and bearish directions, forcing it to remain in a small range.
“We have risks of a recession and signs of an imminent slowdown in global growth driving inflows into gold as a safe haven. On the other hand, we have the Fed’s commitment to fighting inflation contributing to a significant rise in real rates,” Ghali added.
On his part, Carsten Fritsch, commodity analyst at Commerzbank, posited that gold has some minor upward potential in the second half of the year, with a forecast of $1,900 per ounce.
In the short term, however, Fritsch projected that the Fed would hike rates aggressively, providing some headwinds for gold.
Suki Cooper, Standard Chartered analyst, said rising recession risk is preventing outright short positions for now, but he expects gold to revert to tracking real yields for the rest of 2022, pressuring gold prices lower.
In the physical market, the demand for gold swung upwards as dealers offered bigger discounts in India, the world’s second largest gold consumer after China, to lure buyers as the wedding season concluded, while some consumers in China bought bullion to hedge against economic concerns.
Other precious metals edged higher as spot silver climbed 1.2 percent to $21.19 per ounce, platinum rose 0.2 percent to $908.50 per ounce and palladium was up 1.7 percent to $1,876.14 per ounce.
