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As the price of an ounce of gold moved in the narrow band throughout the week, it hit the lowest level since August 9, 2021 in today’s trading. The fact that the US Federal Reserve (Fed) can act more aggressively in raising key rates is effective in seeing the lowest level of an ounce of gold for about a year. On the other hand, declines in the Metal Commodities and Energy Commodities groups are also suppressing precious metal gold prices. The drop in oil prices, which has diminished due to the weak outlook for fuel demand, stands out. While the price of a barrel of Brent oil is below 104 dollars; US crude oil fell below $100. Özer, Integral Investment Research Manager, assessed that “if the US inflation data does not soften and the Fed moves towards more aggressive monetary policy, the pressure on the ounce could increase further”.

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Last week, on Wednesday, US June inflation, which is one of the most critical data for markets, exceeded expectations and renewed the 41-year peak, and high prices were recorded in the markets. Investors shifted from risky assets to safe havens. With the dollar seen as a safe haven around the world, the dollar index hit a 20-year high, while US bond yields also rose. Prices per ounce of gold, which were inversely correlated to the rise in the dollar index and bond yields, have been removed. Since last Friday, a more moderate outlook prevails in the risk appetite picture.

US inflation is a critical piece of data because it is the determinant of the Fed’s tightening policy.

MARKETS WAITING FOR THE FED DECISION

The next meeting of the Federal Open Market Committee (FOMC), which sets the Fed’s monetary policy, will take place on July 26-27. As Fed meeting in July, 75 basis point interest rate hike seen as certain; It is expected to continue raising interest rates in September as well.

Since it will be fixed in advance, a rise in interest rates in line with market expectations should not have a harsh effect on the markets; A surprise rate hike could further strengthen the dollar around the world and increase pressure on the price of an ounce of gold. Additionally, messages from Fed Chairman Powell regarding future economic projections will be key after the meeting.

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THE LATEST GOLD PRICE SITUATION

Gold prices fell to $1680 in today’s trading, hitting their lowest level in about a year. As the ounce of gold sees the high of $1705 today; Currently, it is trading at $1705 with an increase of 0.52%.

The ounce of gold hit the bottom of the year 1. Will the decline last?

As the price per gram of gold starts the new day with a drop; During the day, it saw the highest level of 970.53 liras and the lowest level of 954.86 liras. The gram of gold, while moving upwards under the effect of the rise in the price of an ounce of gold and the exchange rate of the dollar, stood at 969.82 liras with an increase of 1 .03% at 3:58 p.m. In the same minutes, the quarter of gold is exchanged at 1612 lire and the gold of the Republic at 6628 lire.

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While gold prices in grams were moving at the level of 967 liras at the close of Turkish markets yesterday; started the new day at a level of 957 lira.

The ounce of gold hit the bottom of the year 1. Will the decline last?

DOES A FALL IN GOLD PRICES NEED?
Seda Yalçınkaya Özer – Head of Integral Investment Research

The ounce of gold hit the bottom of the year 1. Will the decline last?

The ounce of gold is testing the lowest levels since 2020. There is no new news or stories accelerating the decline of the ounce of gold. The strength of the US dollar and quarterback central bank expectations for further rate hikes to combat rising inflation are weighing on the attractiveness of an ounce of gold. Indeed, the ounce of gold has been falling for 6 weeks. Especially with the dollar index crossing above the 109 level, the sub ounce selling accelerated.

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As long as the strong demand for dollars continues on the world markets, it seems difficult for the ounce of gold to accelerate its upward momentum. On the other hand, risks external to central banks are quite acute in the market. This ensures that gold investors do not abandon gold. I think that investors can continue to prefer an ounce of gold despite an unexpected or not yet assessed risk. It is difficult for an ounce of gold to break above 1800 as long as long-term bond yields in the United States remain above 3%. Interest is the enemy of an ounce of gold. Therefore, if there is no weakening US inflation data going forward and the Fed adopts a more aggressive monetary policy, the pressure on the ounce could increase further.

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BE CAREFUL AT THIS LEVEL

The point reached today under the ounce is very important. We can say that we have reached the decision stage for the gold ounce investor. In case of strong support in 1677, we expect the bullish reactions to gain momentum. Technically, it is possible to say that we are in a good position for the reaction zone, because the ounce is too far from the gold indicators. However, these levels are just as risky. If an ounce of gold is struggling to react or remains weak at 1677, then below 1677 it is empty. Therefore, this may be an appropriate move for a long-term downtrend. The Fed meeting which will take place next week will be very important for the ounce of gold. I expect a rate hike of 75 basis points. Therefore, the power of verbal advice will be very important here.

Even if the ounce of gold reacts upwards from 1677, the main direction is downwards. So I expect the upside to be limited to critical resistance levels. From this perspective, the first resistance is 1720. If it insists on staying above this level, the upside potential towards the 1755-1785 band may increase.

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