Recently, all sectors of commodity sectors have been looted in turn, and gold cannot withstand it.
As of now, gold futures contracts have fallen for four consecutive months, falling more than $81.90 to $1,725.70 per ounce.
This is also the longest continuous decline in gold since November 2020. Earlier, accelerated inflation prompted markets to bet on , Fed will take positive action to curb inflation, and many expect gold to support their portfolios against inflation, but gold prices have fallen 5.5% this year.
Why hasn’t gold become a tool to fight inflation?
Because investors are most worried about now are US economic data. For example, the Consumer Price Index (CPI) rose to 9.1% last month, which could prompt the Fed to raise rates of more aggressively, to cool down consumer prices and producer prices (PPI), while it will drive higher yields on government bonds and drive the dollar up.
So compared to gold, people will prefer bonds and US dollars at this time.
As of the week ending July 19, according to the data from the U.S. Commodity Futures Trading Commission tracking gold futures and options , hedge fund and other speculators have turned into net bearishness, and more people bet on the decline in gold prices than on the rise in gold prices, which is the first time in more than three years.
gold mining stocks were also hit. 7, the VanEck Gold Miners ETF fell 7.2%; Barrick Gold fell 13%; and Newmont Corp. fell 14%. Meanwhile, the S&P 500 index rose 4.7%.
Swiss Bank (UBS) analysts cut their expectations for gold prices by June 2023 to $1,650 last week from $1,700 per ounce.
In March this year, due to the conflict between Russia and Ukraine and inflation , investors chose to invest in gold to avoid risks. But then, investors increasingly believe that the Fed will take all necessary measures to curb inflation, so buying of gold cooled down.
Gold price rose 1.4% this week, ending a five-week decline. The central banks of countries around the world raised interest rates, making the foreign currency of stronger and the dollar weakened, thus boosting gold prices.
According to media, SVB Private chief investment officer Shannon Saccocia said:
"Our inflation is peaking, but the dollar remains strong. This does not mean that gold prices will recover by the end of the year. If gold prices fall below $1,700 per ounce, I would not be surprised."
But if the Fed slows down the pace of rate hikes, it may lower yields and the dollar, lifting gold out of the predicament. Meanwhile, some fund managers say gold is attractive because it is relatively stable compared to stocks and bonds.
Jason Teed, joint portfolio manager of Gold Strategy Fund, said:
"Although gold does not perform well, it has performed quite well this year in terms of diversifying investment and offsetting portfolio volatility."
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