US Dollar Perkasa, World Gold Price Drops

Global gold price (Photo: unsplash)

JAKARTA - Gold prices fell sharply in trading Friday, April 14 local time. The fall stopped an increase for three consecutive days, as the US dollar strengthened following a hawkish statement by Federal Reserve officials.

Despite the decline, the precious metal still persists above the psychological level at 2,000 US dollars.

Quoting Antara, Saturday, April 15, the most active gold contract for June delivery in the Comex New York Exchange division, fell 39.50 US dollars, or 1.92 percent, to close at 2,015.80 US dollars per ounce, after touching the highest level of the session at 2,061.60 US dollars and the lowest of the session at 2,006.00 US dollars.

Gold futures jumped 30.40 US dollars or 1.50 percent to 2,055.30 US dollars on Thursday (13/4), after an increase of 5.90 US dollars or 0.29 percent to 2,024.90 US dollars on Wednesday (12/4), and rose 15.20 US dollars or 0.76 percent to 2,019.00 US dollars on Tuesday (11/4).

The US dollar strengthened after Federal Reserve Governor Christopher Waller, one of the central bank's largest hawkers on interest rates, said in a speech on Friday (14/4) he wanted more monetary tightening despite evidence that inflation in the United States fell from a four-decade high.

According to him, monetary policy must remain strict for a long period of time, and longer than the market anticipated. Higher interest rates benefit the dollar, while gold, which is a hedge asset, does not provide any returns.

"In the short term, gold can remain very volatile in both directions here," said Ed Moya, analyst of online trading platform OANDA.

Despite the latest decline in gold, Moya said there was enough reason for investors to remain positive in this safe haven aser.

"The hawkish Fed comments increase the risk that the Fed can do more tightening after May and interest rates may need to remain higher longer," he added. "In order for inflation to be conquered, we need to look at economic difficulties and that will support the bullish case for gold."

Meanwhile, Fed Chicago President Austan Goolsbee said in an interview with CNBC on Friday (14/4) that the US recession may have occurred due to a sharp increase in the Federal Reserve interest rate over the past year screening the economy completely. He urged the central bank to be careful in making policies.

In an interview with Reuters on Friday (14/4), Atlanta Federal Reserve President Raphael Bostic said that another quarter-point percentage rate hike could allow the Federal Reserve to end its tightening cycle with the belief that inflation would continue to return to the central bank's target of 2.0 percent.

Economic data released Friday (14/4) are diverse. The US Department of Manpower reported that US import prices fell 0.6 percent in March after a revised 0.2 percent slip in February, much higher than expected. US import prices fell 4.6 percent year-on-year.

The US Commerce Department reported that US retail sales fell one percent in March month-on-month. This is steeper than the expected 0.4 percent drop, and above the revised 0.2 percent drop in the previous month.

Another precious metal, silver for May delivery fell 46.50 cents, or 1.79 percent, to close at 25.46 dollars per ounce. Platinum for July delivery slumped 11.50 dollars, or 1.08 percent, to settle at 1,054.00 dollars an ounce.