Gold is heading to record its largest monthly loss since 2008 as the bet on raising interest rates escalates

Gold prices fell during trading today, Tuesday, heading towards recording the largest monthly loss since October 2008.

This comes, as investors’ focus shifts from geopolitical tensions in Middle East to expectations of tightening US monetary policy to confront continued inflationary pressures.

Gold prices

The price of Goldin spot transactions rose by 0.8% to $3,985.57 per ounce by 06:13 GMT, bringing its losses since the beginning of June to about 12.1%, on its way to recording its fourth consecutive monthly decline.

US gold futures contracts for August delivery also fell by 1% to $3,999.20 per ounce.

The precious metal is also heading to… Recording the first quarterly loss since 2024, and the largest since the second quarter of 2013, after the Iranian war led to a sharp rise in energy prices, which reinforced inflationary fears and prompted markets to expect further increases in US interest rates.

Inflation and interest rates

Edward Meir, an analyst at Marex, said that the rise in inflation rates and the increasing expectations of raising Interest rates, in addition to the strength of the US dollar, have become overwhelming factors over the traditional incentives that support the rise of gold, according to Reuters.

He explained that gold, despite being considered a safe haven and a tool to hedge against inflation, is losing a large part of its appeal in an environment characterized by high interest rates, as the cost of holding non-returning assets rises.

Markets currently expect that the US Federal Reserve will conduct three increases in interest rates during the current year, while market pricing indicates the possibility It is about 64% to raise interest during the September meeting, according to the CME FedWatch tool.

This week, investors are awaiting the release of US employment data, led by the private sector jobs report issued by ADP, along with the non-farm payrolls report, to obtain additional indications regarding the Federal Reserve’s directions during the coming period.

At the same time, the US dollar continued its gains, heading to record a second monthly rise in a row, which increases the cost of purchasing dollar-denominated gold for holders of other currencies, and puts pressure on demand. Global.

In energy markets, oil prices are heading to record the largest quarterly loss since 2020, with investors awaiting the results of the upcoming talks between the United States and Iran in the Qatari capital, Doha, despite Tehran’s announcement that no official date has been set for holding these meetings.

For his part, Christopher Wong, precious metals strategist at OCBC, said that gold’s recovery requires improvement in one of three main factors, which are a decline in real yields, a decline in the US dollar, or a decline in tightening expectations. Monetary measures by the Federal Reserve, indicating that in the absence of these factors, gold’s gains are likely to remain limited and move below its previous record levels.

In other precious metals, silver fell by 1.3% to $57.53 per ounce, while platinum fell by 0.7% to $1563.25, while palladium rose by 0.4% to $1218.07 per ounce, with the three metals heading for monthly losses. And quarterly.

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