Has Gold Lost Its Luster? It May Fall Below $1,650

Nouraldin Mohammed, the head of Target Investment, stated that gold is expected to decline in the coming period due to changes in the market that affect its attractiveness. He mentioned in his comments to Al Arabiya that the statements from the Federal Reserve on Wednesday indicating a tightening monetary policy have led some funds to shift from investing in gold to investing in 10-year U.S. Treasury bonds. He explained that gold could fall to levels between $1,620 and $1,650 before rising again by the end of the year. The U.S. central bank indicated on Wednesday that it would consider reducing its asset purchase program at every meeting it holds and brought forward its expectations for the first interest rate increases after the pandemic to 2023. Following the Fed's tightening statements, the dollar surged to its highest level in two months. Although gold is considered a hedge against inflation, high interest rates will reduce its attractiveness as they imply higher opportunity costs for holding it. Gold rose in spot transactions by 0.5% to $1,781.96 per ounce on Friday, but it is down 5% over the week. U.S. gold futures gained 0.5% to $1,782.70.