As recently as the beginning of May, the gold price had risen to USD 2062 per troy ounce (31.1 grammes), narrowly missing a record high. Recently, the gold price fell, and in mid-August it was at 1895 dollars.
Market observers explained the recent price pressure as speculation on further rising interest rates in the USA. Since the Fed is open to further interest rate hikes as a tool to fight inflation, gold becomes less attractive. The higher the interest rate level, the less interesting gold is as a financial investment.
In addition, the rise of the dollar in the wake of interest rate speculation also caused selling pressure. Gold is traded in dollars on the world market, and a strong US currency makes the precious metal more expensive and slows down demand.
Experts do not expect the gold price to rise further. “If you just look at the interest rate development and the currency situation, gold should trade lower,” Stefan Graber, head of commodity strategy at Credit Suisse, told the Neue Zürcher Zeitung. Analysts at Citigroup expect prices between USD 1800 and USD 1900 per troy ounce for the rest of the year.
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Banks buy less gold
Experts at London-based Dekabank pointed to declining gold purchases by central banks. According to data from advocacy group the World Gold Council, central bank purchases fell by about 35 percent in April–June compared to the previous quarter. “While their share of total demand was still around one-third in the third quarter of 2022, it was recently only just over ten percent,” a Dekabank analysis said.
The Economy Forecast Agency (EFA), an independent agency specialising in long-term forecasts, does not predict a significant increase either. In September, the highest price is expected to be USD 1910 and the lowest USD 1728.
The lowest price this century was recorded in May 2005. At that time, it was 429.15 USD per troy ounce.
