Price Performance Indicator

Gold Focus :

• In a week (11/04 – 14/04) ICDX gold price rose 0.01%.

• The Fed gave a signal to raise interest rates by 50 basis points in May.

Market Review

ICDX gold prices moved 0.01% higher from the previous week with prices moving up as the Federal Reserve president took a fairly strong stance on inflationary pressures, he signaled he would raise interest rates by 50 basis points at the upcoming central bank meeting.

World gold prices touched $1973.39 per troy ounce in the second week of April after previously being at $1,947.68 per troy ounce in the previous week. The increase in April was due to US president Joe Biden provision of US$800 million in arms aid. In addition, Russian President Vladimir Putin said that peace talks with Ukraine had reached a stalemate, this gave a strong signal that the conflict could last longer. The conflict between Russia and Ukraine supported rising inflation. This situation encourages the attractiveness of gold products as a hedging asset, investors seem to prefer to invest in gold whose value is more stable in times of inflation.

The Fed raised interest rates last month for the first time in three years, in a move to curb inflation. In addition, US monthly consumer data jumped in March. A government report on Tuesday, April 12 is expected to show the Consumer Price Index rising to a level of 8.5%. The annual gain was the biggest since December 1981, having previously touched the 7.9% level in February. The increase in the value of inflation triggers an increase in demand for gold.

Market View

Bureau of Labor Statistics released data that the US CPI rose in March, providing a strong signal of further rate hikes by the Fed. The increase in interest rates depends on the results of the meeting on 15-16 May. The annual inflation rate which reached the level of 8.5% signaled an increase in interest rates.

The movement of gold prices will depend on the increase in interest rates by the Fed, if the Fed raises interest rates, the price of gold, as a safe-haven asset, will be depressed because gold does not provide good returns, thus making investors invest more in financial products. Another factor influencing the movement of gold prices is the increasing conflict between Russia and Ukraine. If the conflict drags on - it will increase the factor of economic uncertainty, economic uncertainty makes investors choose gold because the value of gold tends to be more stable when there is economic uncertainty.

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