Could gold deteriorate further below $1640?

Gold price stumbled to thirty month low at $1638.90 on Friday before it turned back to trade at $1643 per ounce at the time of writing versus Thursday’s closing price at $1670.95. Volatility in the markets and dramatic FX plays did not leave gold untouched as the precious metal fell another 1.7% this week.

Global S&P PMIs released in the EU, UK, and the US triggered anew investors’ recession fears, increasing appetite for the US dollar which enjoys the safe-haven status, with the US Dollar Index sitting at 112.990, up by 1.55%, after hitting the YTD high at 113.228.

It is usually a confident advice to own gold that remains as a firm favourite during periods of geopolitical uncertainty, when it is looked upon as a reliable safe haven.

But gold prices have not surged. Instead, prices are down almost 20% from their latest March 2022 peak. That puts gold on the tip of a bear market.

Gold price has been dampened by a risk-off mood during the US session and flows were directed toward the US dollar, which rose to new two-decade highs. Generally speaking, the stronger US dollar accompanied with the higher US Treasury bond yields are two factors for the precious metal’s fall and even the fall of some other metal commodities including silver.

Fed’s rate hike, on Wednesday, is opening the door for another 120 bps increase, reignited US recession fears.

Gold and the other semi-investment metals like silver and platinum will likely continue to remain under pressure until the market reaches peak hawkishness.