Rising Interest Rates Are Inhibiting The Demand For Gold And Silver, Concerns Around A Recession Are Driving Brent Crude Oil Prices Down
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Summary:
- Aggressive central banks inhibiting metal demand.
- Fears of a slowing economy are sending brent crude oil into its second consecutive week of declines.
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Demand for gold declining as interest rates rise
Gold futures declined on Friday and were set to decline for their second consecutive week in the wake of stronger expectations that major central banks will continue to raise interest rates aggressively in an attempt to control inflation, which subdued the demand for metals. The Chairman of the Federal Reserve, Jerome Powell reiterates that his commitment to fighting 40-year high inflation is ‘unconditional.’
Gold is usually viewed as a hedge against inflation and as a safe-haven asset during times of economic crisis, however as interest rates rise, so too does the opportunity cost of holding gold.
Gold Aug ‘22 Futures Price Chart
Brent Crude Oil facing second consecutive week of declines
Brent Crude is on track to decline for the second straight week on Friday in the wake of concerns around aggressive monetary policy tightening and the effects it will have on the global economy and the demand for oil. US manufacturing and services PMIs released on Thursday came in well below expectations which increased fears of a slowing US economy.
In addition, investors are remaining cautious amidst signs that global crude oil and fuel supply remains tight.
Brent Crude Oil Futures Price Chart
Silver prices on the decling
As the Federal Reserve and other major central banks continue to rise interest rates in an attempt to tackle rising inflation and risking a global recession, the price of silver is falling. Silver is usually viewed as a hedge against inflation and as a safe-haven asset during times of economic crisis, however as interest rates rise, so too does the opportunity cost of holding silver.
Silver Jul ‘22 Price Chart
Sources: finance.yahoo.com, tradingeconomics.com
