The rebounding dollar has put some of the world's major commodities back in the spotlight. One of them is gold. Based on the data, the metal is in decline and even in the worst month for the last 4 years. What other reasons are causing this situation?
This commodity was reportedly down slightly in the previous session. It is because the first US presidential debate was considered very chaotic and far from expectations. This is what then drives investors to run into the dollar. There are also concerns over the next stimulus bill.
Those conditions led this commodity to its worst month in nearly four years. If it is not fixed immediately then it is possible that the price of this commodity will continue to fall. Of course, this is not expected by some current market participants.
The Price of Gold Condition
Spot gold fell as much as 0.3% to $1,892.33 an ounce. The commodity fell back about 4% in September. This means the metal is on track for its worst monthly performance since November 2016. U.S. gold futures did, too.
It was down 0.4% at $1,895.50. It seems that after the debate, a gap may be formed between the two parties again and the chances for any kind of stimulus may have diminished. It is what Phillip Streible, chief market strategist at Blue Line Futures, said.
The first U.S. presidential debate between President Donald Trump and Democratic rival Joe Biden left investors cautious. The moment also encouraged them to seek protection against the dollar thus reducing the attractiveness of this one for holders of other currencies in the market.
The dollar index itself has been set for its best month since July 2019. Every time the dollar index strengthens, many analysts see a deflationary environment. Interestingly, it weighs on not only the price of gold but also silver and many other commodities right now.
Gold Has a Chance to Rising
Despite the recent weakening, most analysts see an upward trajectory for gold in the medium to long term. The metal is on track for its eighth consecutive quarterly gain that makes the prices may rise. They have a reason why this hope can arise.
The good thing for gold is, with more uncertainty, the more people want to have gold. In addition, it seems that some policies may continue, such as low and negative interest rates around the world, Here's the opinion of Michael Matousek, chief trader at U.S. Global Investors.
Silver also fell as much as 3% to $23.55 an ounce and platinum rose as much as 1.3% to $895.99. Silver is on track for its worst month since September 2011. The commodity is down about 17% over the month and may still struggle to climb.
Meanwhile, platinum is set for its biggest drop since March, falling more than 3%. When viewed from these two metals, then of course gold does not have a bad decline. On the other hand, improvements to this metal’s price conditions in the market are also considered possible.
Economic Data Forecast
The eurozone unemployment rate is expected to continue to rise and reach 7.9% in August. The upward trend is also expected to continue in September, with an estimated 8.1%. The diffusion index rate is based on purchasing managers surveyed in the manufacturing industry.
This is a key indicator of the health of businesses reacting quickly to current market conditions. On the other hand, their purchasing managers may have up-to-date and relevant insights into the company's view of the economy. It is expected to be at 56.0.
It is for sure that the forecast can change in the future. It is based on several conditions in the market. Furthermore, now is also reported that the Dollar is weakened again because of the US Stimulus policy and other reasons.
