Gold prices have fallen for a fourth consecutive day. Notably, while oil prices are rising, the value of gold is declining.
What economic factors lie behind this contradictory trend? How does rising oil affect the gold market, and how long could the price decline continue? Is it possible that gold could become more expensive again in the near future?
Rovshan Amirjanov, deputy chairman of the Azerbaijan Jewelers Association and an economist, told Globalinfo.az that rising oil prices affect gold prices through expectations related to inflation and interest rates:
“Rising energy prices raise concerns that inflationary pressures could intensify. In this case, market participants may expect the US Federal Reserve to keep interest rates high for longer or even raise them further. Higher interest rates make non-yielding gold less attractive compared to bonds and other interest-bearing assets. Rising yields on US government bonds also put pressure on gold prices.”
Rovshan Amirjanov
According to him, the fact that US consumer and producer price indices have exceeded expectations in recent days, along with rising oil prices, has heightened inflation concerns:
“As a result, expectations that interest rates will remain high have grown in the market, and gold has become cheaper. However, the price of gold does not depend solely on these factors. This shows that investment interest remains even amid the price decline.”
The economist said fluctuations in the price of gold could continue in the near future:
“Prices will be affected by US inflation indicators, the Federal Reserve’s decisions and statements, the dollar exchange rate, bond yields and the geopolitical situation. If inflation concerns and expectations of interest rates remaining high intensify, pressure on gold could persist. Conversely, if these factors weaken, it could support the price of gold.”
Zaira Akifgizi
Globalinfo.az
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