After a slight uptick on the morning of 3/3, global spot gold prices began a sharp decline in the afternoon. Currently, the price has dropped by 252 USD, falling to 5,067 USD.
The market downturn is attributed to the strengthening US dollar. The dollar index, which measures the USD's strength against six major currencies, rose 0,9% to its highest level in one month. "The US dollar is strengthening significantly, as are US government bond yields. These are major headwinds for gold and silver", independent analyst Ross Norman told Reuters.
 |
Global gold prices plunged on 3/3. Chart: Kitco |
Global spot silver prices are currently down over 10%, trading at 79 USD per ounce. In the previous session, prices had reached a four-week high.
A strong USD makes gold less attractive, as the precious metal becomes more expensive for buyers using other currencies. Concurrently, rising US government bond yields reduce gold's appeal since it does not offer interest.
Another factor contributing to the price decline is investors betting that the US Federal Reserve (Fed) will maintain current interest rates for an extended period to monitor inflation.
The ongoing conflict is accelerating energy prices, threatening to ignite inflation. Since 27/2, global crude oil prices have surged over 15%. On 3/3 alone, Brent crude rose an additional 6% to over 82 USD per barrel, marking its highest level since july 2004.
According to the CME FedWatch Tool, the probability of the Fed holding rates steady at its june meeting is 60%, an increase from 45% before the conflict began.
On the US stock market, key indices are also plummeting. The DJIA is currently down over 1,000 points, a 2,1% decrease. The S&P 500 has fallen 1,8%, and the Nasdaq Composite has dropped nearly 2%. In the prior session, the indices remained relatively flat.
Wall Street's decline reflects investor concerns that the Middle East conflict will last longer than anticipated. The conflict in the region has entered its fourth day and has expanded to several countries. US President Donald Trump stated the conflict could extend for over one month.
Ha Thu (according to Reuters, Kitco)
