Weekly Round-Up: Gold Falls on Higher US Interest Rates Expectations

The gold price found itself in a downward motion for the first time in three-weeks as investors prepared for higher US interest rates and political tensions regarding the Korean Peninsula and Syria eased.

As of 8:44 a.m. EST on Friday (April 20), the yellow metal sat at US$1,342.10 per ounce — down 0.24 percent.

“We don’t see much fresh buying interest and there is some profit taking. The physical demand is also very weak. The market is not able break above US$1,355, which is acting as a good resistance and causing some long liquidations,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

“Prices have been stuck in the US$1,320-US$1,360 range for a good time … the upside is also limited due to the fear of interest rates,” he added.

Concerns over missile strikes in Syria that supported gold earlier in the week have eased, while the geopolitical outlook on the Korean Peninsula brightened with positive comments from US President Donald Trump who hoped for a successful summit.

“The uncertainty over geopolitical risk and trade war tension has moved to the back burner this week and has made for a less compelling argument in the gold market,” said Stephen Innes, APAC trading head at OANDA.

For its part, silver was also down by the end of the week, decreasing 0.55 percent to sit at US$17.13 an ounce as of 8:59 a.m. EST on Friday.

Despite taking a hit on Friday, the white metal experienced a week of impressive gains, dwarfing any uptick gold made, by rising 2.43 percent.

The precious metal’s substantial rally also pushed the gold/silver ratio back below 80 for the first time since mid-March. Market watchers have long-said that once the gold/silver ratio dipped below 80, silver would start making more impressive gains within the market.

“[The] surge in silver finally sprung it free from the congestion it was caught in for the past couple of months and suddenly brings to light the prospects of an important long-term breakout,” Paul Robinson said in a DailyFX post published on Thursday (April 19).

Rounding out the week in metals is copper, which was down for the week trading at US$3.14 per pound as of 12:54 p.m. EST.

Meanwhile, oil also experienced a slight dip in the market Friday afternoon. This comes after the energy resource sector hit highs not seen since 2014 on Thursday (April 19). Oil’s gains were made on the back of persistent drawdowns in global supply and Saudi Arabia’s push to heighten prices.

Friday’s price dip is attributed to President Donald Trump’s accusation that the Organization of the Petroleum Exporting Countries (OPEC) has been inflating prices.

“Looks like OPEC is at it again. With record amounts of oil all over the place, including the fully loaded ships at sea. Oil prices are artificially very high! No good and will not be accepted!” Trump wrote on Twitter.

Several OPEC members rejected the president’s comments, saying prices were not artificially inflated.

“We don’t have any price objective in OPEC, and not in this joint endeavor with non-OPEC,” said OPEC Secretary General Mohammed Barkindo.

“Price is not our objective. Our objective remains restoring stability… on a sustainable basis,” he added.

As of 1:26 p.m. EST, oil was sitting at US$68.16 per barrel.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.