– Gold prices dropped by one percent to reach USD 1644 an ounce at the end of last week’s trades, amidst expectations of American interest rate hike.

This came in an economic report issued by Kuwaiti Dar Al-Sabaek, which added that the precious metal is approaching its lowest level in 19 months.

Dar Al-Sabaek forecasts losses in gold market in case the American Federal Reserve continues monetary policy managing inflation.

Head of strategic planning department within the company, Adel Al-Fadhli, explained that inflation remaining high in the American market, means high interest rates that reflect directly on gold prices as investors flock towards US dollar rather than invest in precious metals.

Al-Fadhli indicated that the continuous rise of United States Treasury securities to higher than four percent for a 10-year treasury note adds further pressure on gold prices.

He added this it is unlikely that the Federal Reserve would halt interest rate increase, especially as inflation remains very high in spite of increasing interest five times since the beginning of the year.

Al-Fadhli expects interest rate to reach five percent by the end of the year.

Gold, usually a safe haven against economic fluctuations and inflation, but the strength of US dollar raises expenses of gold to non-dollar carriers, therefore curbing demand on gold ounces causing prices to retreat.

As for the local market, Al-Fadhli commented that individual purchases are booming due to the decreased prices.

Source: Kuwait News Agency