Prices Of Gold Drop After Momentarily Reaching $2,000 For An Ounce

Tuesday saw a drop in gold prices following two straight sessions of increases that temporarily took the price beyond $2,000 an ounce and to its highest hourly level in a year.

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Prior to the Federal Reserve's interest rate announcement on Wednesday, concerns over the banking system had lessened, but some analysts are speculating that the yellow metal could soon reach its all-time peak above $2,060 per ounce.

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Price Movement

• On the Comex, the price of gold for April delivery decreased by $24, or 1.2%, to $1,958.80 per ounce (GC00, -1.57%; GCJ23, -1.57%). According to FactSet data, prices reached a high of $2,014.90 on Monday, the highest hourly level for a most-active commodity since March 10, 2022.

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• Silver futures for May delivery lost 12.1 cents, or 0.5%, to trade at $22.525 per ounce SI00, -0.91% SIK23, -0.93%.

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• The most actively traded platinum contract for April, PLJ23, -1.87%, dropped by $7.80, or 0.8%, to $989 per ounce, while palladium futures for June delivery, PAM23, -0.72% traded at $1,395.50 per ounce, down $5.10, or 0.4%.

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• The price of a pound of copper in May delivery (HGK23, 0.77%) increased by 6.2 cents, or 1.6%.

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market forces

According to Edmund Moy, a former director of the U.S. Federal Reserve, every time gold has surpassed $2,000 in recent memory is "when a crisis comes that produces economic uncertainty" and prompts investors to go for safe-haven commodities like gold. Mint spoke with MarketWatch.

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According to Moy, who is also a senior IRA strategist for the gold and silver dealer U.S., these crisis occurrences include the COVID-19 pandemic and the ensuing closures and quarantines in 2020, the Russian invasion of a Ukraine in 2022, and now the "string of bank runs causing a potential erosion of self belief in the global banking system." Cash Reserve.

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On Monday, intraday gold prices reached their highest point since March of last year. Yet gold prices haven't been able to stay above the crucial $2,000 mark.

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Profit takers are likely to have exerted downward pressure on gold, and investors have since been more cautious as they await the Fed's decision on interest rates and its future direction, according to Moy.

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After a two-day meeting, the monetary policy committee of the Federal Reserve will make its interest rate announcement on Wednesday.

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While the choice to raise interest rates is going to have an impact, Moy asserted that many are waiting for the Fed to indicate the direction it intends to take the economy in. "It seems to me that now the top concern is no longer only balancing the need to reduce inflation without causing a recession with the need to reduce inflation without causing a worldwide financial crisis," said the author.

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Gold prices were down on Tuesday, but analysts who specialize in precious metals said the trend was still in gold's favor.

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While the choice to raise interest rates is going to have an impact, Moy asserted that many are waiting for the Fed to indicate the direction it intends to take the economy in. "It seems to me that now the top concern is no longer only balancing the need to reduce inflation without causing a recession with the need to reduce inflation without causing a worldwide financial crisis," said the author.

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Gold prices were down on Tuesday, but analysts who specialize in precious metals said the trend was still in gold's favor.

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According to Dow Jones Market Statistics, the highest settlement price for the most active gold futures was $2,069.40 on August 6, 2020, and the highest intraday price was $2,089.20 on August 7.

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Given the existing trend of gold surpassing $2,000 during crises, Moy said he still thinks 2023 will be a strong year for gold prices, "perhaps topping $2,100 an ounce." There are "more than enough concerns in play that could fuel higher gold prices," he added.