Price Performance Indicators

Gold focus :

1. ICDX gold price rose 2.46% in a week (26/9 - 30/9).
2. Russia - Ukraine tensions and dollar index’s performance

Market Review

ICDX gold prices rose by 2.46% compared to the previous week, supported by the retreat of dollar index and the referendum conducted by Russia on the territory of Ukraine triggering tensions between the two countries.

Russia is holding a referendum to annex four Ukraine territories to run until Tuesday, September 27. The four regions are Luhansk, Donetsk, Kherson, and Zaporizhzhya account for 15% of the total area of ​​Ukraine. Ukraine President Volodymyr Zelensky took a firm stand against what he described as illegal and contacted leaders of countries including Britain, Canada, Germany and Turkey urging more military aid and tougher sanctions against Russia. UN Secretary General Antonio Guterres also responded that Russia's annexation was a dangerous escalation and jeopardized prospects for peace.

The dollar index weakened by -1.66%, supporting gold's positive performance. Dollar-priced gold feels more affordable to other currencies holders, boosting demand for gold. The US pending home sales index released by the National Association of Realtors fell 2% in August compared to a 0.6% decline in July. US Durable Goods Orders m/m released by the Census Bureau also contracted at -0.2% compared to the previous data of -0.1%.

Market View

US Federal Reserve Announce Interest Rate Hikes

Gold movement is overshadowed by the projection of a further increase in the benchmark interest rate by the Fed. The Fed announced a third 75 basis point hike as a result of the FOMC Meeting held on September 20-21 which lifted interest rates in the range of 3.00% - 3.25%. At the same time, new projections of interest rate hikes were announced to 4.25% - 4.50% by the end of this year and 4.50% - 4.75% by the end of 2023. The existing projections raise expectations of further increases of 125 basis points in the 2 remaining meetings within this year. The condition of higher interest rates helped lift US bond yields and negatively affected gold. However, gold still has potential as a hedge asset amid geopolitical uncertainty to look for when the Russian - Ukraine political turmoil intensifies.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Sumber: ICDX Research