Five Factors That Might Trigger Gold prices In the Short term

Gold prices today at the Multi Commodity Exchange Market (MXC) are reading 78,350.14 Kenyan Shillings per 10 grams, the same as levels recorded on Friday.

Spot gold prices have dropped from their recent high of 238,795.20 Kenyan Shilling levels to 221,952.64 Kenyan Shilling per ounce.

According to experts, last week’s gains for the yellow metal have been erased as demand slightly falls amid progress in Russia Ukraine peace talks.

Russia’s promise to scale down military operations in Kyiv last week greatly affected the metal prices.

Meanwhile, apart from the price shocks caused by the peace talks between the two nations, various factors still shape the rise or fall of gold prices in the global market in the short term.

Some of these factors include;

1. Dollar Index

Recently, there has been a sharp upside move in the Dollar Index that has worked as a check on the yellow metal prices in the spot market.

Now that the Dollar index has once again started ascending, it would be interesting to see whether the rise will be able to sustain at current levels or retrace like last week.

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Any further increase in the Dollar Index will keep and contain the sharp upside move in gold prices.

2. US Fed Interest Rate Hike

According to the Vice president at IIFL Securities Anuj Gupta, US Fed tends to prepare the markets for its scheduled meetings. For instance, it recently released a statement to increase the interest rates by 50 bps.

The actual outcome of the meetings is yet to be felt. Investors should therefore look forward to and keep an eye on the official statements likely to be released in their next meeting.

3. US Data

Although inflation remains a big worry, the recent US reports show positive data on bond yield.

Since the next inflation data is fundamental, gold investors are advised to be updated with the latest US inflation data.

4. Shillings vs Dollar

Apart from the global triggers, one needs to remain vigilant about the domestic triggers. For instance, the Kenyan shillings closed at 115.10 yesterday, the lowest it has ever recorded.

After easing the tension between Russia and Ukraine, crude oil prices came down and strengthened the shillings against the US Dollar.

However, in case of any further misunderstanding between the two nations, oil prices might start surging upside again. Out Dollar flow may scale northward since Kenya imports almost 85 percent of oil net demand.

So, in the short term, the performance of the shilling against the dollar might affect gold prices, and investors should follow the performance keenly to be up to date.