The price of gold weakened due to the strengthening US dollar

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Financial markets during the European Friday morning on August 25, 2023 are waiting for the speech of the head of the central bank of the United States Federal Reserve System (FED) as part of his participation in the traditional economic symposium in Jackson Hole, considering that in his speech he could give an indication of the further development of interest rates in the US. It is interest rates that are the central bankers’ main monetary tool for the exchange value of currencies, in this case of the FED, for the exchange value of the US dollar (USD) as the main commodity currency of world markets. The exchange value of the US dollar, as measured by the DXY (US Dollar Currency Index), which compares the value of the USD with the other six major world currencies, increased even more during this 34th week of this year 2023. The value of the point status of this dollar index was on Monday 21/08/2023 at approximately 13:15 CET in the amount of 103.18 USD points and now currently during the beginning of the European afternoon on Friday 25/08/2023 at approximately 13:20 CET it was the value of this dollar index DXY in the amount of 104.00 USD points with a technical growth to date of + 0.01% of the point value according to this index.

In this situation, commodity trades with gold have been in a trade trend of alternating growth and subsequent decline in the price of investment gold on the commodity market since the beginning of this reported week. Gold is up about 1.3% so far this week, which could be its first week of gains this month of August 2023, as prices climbed to their highest since August 10, 2023 on Thursday, August 24, 2023, and this after the decline in US Treasury yields. Currently, during the European afternoon of Friday 25/08/2023, at approximately 13:24 CET, investment gold was traded on the commodity market COMEX (Commodities Exchange Centre) at a value of USD 1,944.00 per troy ounce with a daily decrease of -0. 16% of the price. According to technical analysis data, the current price of investment gold thus represents a total annual growth of +5.48% over the last 52 weeks, but in the last almost 8 months, i.e. since the beginning of this year 2023, the price of investment gold has strengthened by only 1.76 percent of its previous prices at the end of last year 2022.

The current price of gold in connection with the exchange value of the American dollar (USD) has thus eased its growth rate, which it had at the beginning of this month of August 2023. According to analysts, the price of gold is strongly influenced by the value of the USD according to the well-known inverse rule, when investors at the time of a strong USD, they are leaving positions in gold and rather reallocating funds into bonds, which, unlike gold, bear regular returns. In the case of higher volatility of the USD exchange rate against major world currencies, investors are looking for safe investment havens, and that is precisely gold investments. However, countries outside the dollar zone, such as China, India, the Russian Federation, Switzerland and Japan, now reach the highest volumes of gold purchases, and due to the strong USD, their interest in the form of demand is significantly decreasing, and with it the price of gold on the commodity market. For example, on the day and time indicated, during the European afternoon of Friday 25/08/2023, the exchange rate of the single European currency Euro (EUR) against the US dollar (USD) was 1.080 USD per EUR, with the EUR down by -0.056% against the USD so far.