Price Performance Indicator

Gold focus:

• In a week (6/06 – 10/06) ICDX gold price rose 1.60%.
• Economic Uncertainty Underpins Gold's Movement.

Market Review

ICDX gold price moved 1.6% higher compared to the previous week with prices moving up after concerns over economic growth made the safe-haven metal's appeal increased.

The release of Non Farm Employment Change data by the Bureau of Labor Statistics moved up to the 390k zone above expectations which was in the 325k zone. If the Fed sees a stable economy, they dare to raise interest rates. The Fed will meet the Federal Open Market Committee (FOMC) on June 14-15. The greater the expectation of an increase in interest rates, the yield on US government bonds rose. The yield on the 10-year US Treasury note rose to 2.947%. Market expectations that the Fed will raise interest rates will support the movement of the US dollar and the yield of US government bonds. However, high US inflation made gold move higher so that factors such as expectations of an increase in interest rates did not really play a role in gold's movement. When inflation is high, gold tends to move steadily.

Concerns over economic growth boosted the safe-haven metal's appeal ahead of the release of US inflation data. The release of this inflation data will affect the increase in the Federal Reserve's interest rate. Although seen as a hedge in times of inflation, gold price movements are sensitive to rising interest rates. if the Fed raises interest rates then gold prices will be depressed, as a safe-haven asset gold will be depressed because gold does not provide a good return. The economic uncertainty that occurs makes investors choose gold because the value of gold tends to be more stable when economic uncertainty occurs.

Market View

Consumer Price Index m/m data released by the Bureau of Labor Statistics moved up to the level of 1% compared to the previous level of 0.3%. Gold is seen as a hedge in times of inflation. High inflation benefits gold because market participants do not want to keep their assets in the form of money because it is easy to lose value and prefer to invest in gold whose prices tend to be stable and safer during inflation. The Fed's meeting was held on June 14-15 to suppress inflation. Markets expect the Fed to plan to raise interest rates by 50 basis points. Will the results of the Fed's meeting this week weigh on gold prices?

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Riset Indonesia Commodity and Derivative Exchange

Gold Weekly Newsletter