KUALA LUMPUR: Gold futures contracts on Bursa Malaysia Derivatives are expected to trade in a tight range this week with a downside bias as the Federal Reserve’s hawkish stance of higher-for-longer interest prospect presents more headwinds for gold.
Higher interest will increase the opportunity cost of investing in non-yielding assets, an analyst said.
SPI Asset Management managing director Stephen Innes commented that gold markets are surprisingly resilient in the face of higher yields.
“However, gold buyers are expecting a United States (US) economic slowdown in the fourth quarter this year driven by the resumption of student loan repayments, the United Auto Workers (UAW) strike and a possible government shutdown.
“But in a high rate, strong dollar environment, gold gains could be limited next week unless US yields move significantly lower. In addition, physical demand is soaring due to safe haven and wedding season demand so dips remain attractive for Asian buyers,” he told Bernama.
For the week just ended, domestic gold futures volume was higher with a total of 174 lots traded compared to 130 in the previous week, while open interest was unchanged as the previous Friday’s 97 contracts.
On a weekly basis, spot month September 2023 rose to US$1,929.20 per troy ounce from US$1,922.90 in the previous week, while October 2023 advanced to US$1,938.50 from US$1,932.00 previously.
Contracts for November 2023, December 2023, February 2024 and April 2024 all settled higher at US$1,946.50 per troy ounce against US$1,940.60 per troy ounce in the previous week.
The price of physical gold stood at US$1,915.0 per troy ounce as published by the London Bullion Market Association’s afternoon fix on Sept 21. – BERNAMA
