Gold Price Drops To Lowest Point In The Last 6.5 Months

Illustration - Gold bullion on 100 US dollars banknotes. (Between/Shutterstock/pri.)

JAKARTA - Gold slumped sharply to a minimum of 6.5 months at the end of trading Wednesday (Thursday morning WIB). This condition extends losses for the third session in a row and falls below the psychological level of 1,900 US dollars, amid continued flow of investment money from yellow metal to greenback and government bond yields.

The most active gold contract for December delivery in the Comex New York Exchange division, plunged 28.90 US dollars or 1.51 percent to close at 1,890.90 US dollars per ounce, after trading to the highest session at 1,921.70 US dollars. The previous lowest price for gold in December was 1,875.70 US dollars, recorded on March 13.

The price of gold futures fell 16.80 US dollars or 0.87 percent to 1,919.80 US dollars on Tuesday (26/9/2023), after slipping 9.00 US dollars or 0.46 percent to 1,936.60 US dollars on Monday (25/9/2023), and rose 6.00 US dollars or 0.31 percent to 1,945.60 US dollars on Friday (22/9/2023).

The gold percolation below $1,900 has also sparked a technical sell-off, as well as an increase in the yields of US government bonds.

The prospect of a higher US interest rate for a longer period of driving the dollar, makes gold more expensive for overseas buyers.

Dollars and bond returns from the US government experienced an almost unstoppable rally. The dollar index hit an unprecedented high since November 2022. The stronger dollar usually makes those holding other currencies reluctant to buy commodities in dollar denominations, including gold.

The yield, which refers to 10-year US government bonds, jumped to new highs in 16 years on Tuesday (26/9/2023), to a peak never seen since July 2007.

The US dollar will be difficult to overthrow," said Ed Moya, an analyst on online trading platform OANDA.

"The US dollar is strengthening as government bond yields continue to increase and expectations (that) the story of US growth exepsionalism is not ready to disappear," Moya said again as reported by Antara.

The US Department of Commerce reported Wednesday (27/9/2023) that US long-lasting goods orders rose 0.2 percent on a lunar basis in August based on seasonal adjustments to USD 284.7 billion.

Investors are waiting for the release of the personal consumption expenditure price index (PCE), which is a measure of the Federal Reserve's choice of inflation, on Friday (29/9/2023).

Another precious metal, silver for December delivery, fell 47.20 cents, or 2.03 percent, to close at 22.724 dollars per ounce. Platinum for January delivery decreased by 17.90 dollars, or 1.96 percent, to settle at $896.30 per ounce.