KUWAIT CITY, Feb 1: The price of one gram of 24-karat gold in the country reached about KD48.600 (around $148) and 22-karat gold reached KD44.45 (around $135), while silver reached KD1,015 (around $3,327) per kilogram.

A report issued by the Kuwaiti company Dar Al-Sabaik on Sunday disclosed that gold prices witnessed a sharp decline at the end of last week’s trading, with the precious metal dropping by more than 11 percent to close at $4,892 per ounce. This decline was driven by a strong wave of profit-taking after gold reached historic highs exceeding $5,600 per ounce earlier in the week. According to the report, such a decline did not prevent gold from recording its sixth consecutive monthly gain, marking its longest monthly winning streak since September 2005. This surge is supported by escalating global geopolitical and economic risks. The report added that gold futures contracts (for February delivery) fell by 11.37 percent or $604. Despite this drop, gold ended January with gains of nearly nine percent – the largest percentage increase since February 2008.

This reflects the prevailing economic uncertainty and the growing demand for gold as a safe haven. The report explained that this sharp decline in precious metal prices resulted from profit-taking pressures following the meteoric rise that propelled gold to a record high of $5,608 per ounce, along with a recovery in the US dollar and rising treasury yields as investors reassessed the outlook for US monetary policy. It added that US President Donald Trump’s announcement of the nomination of Kevin Warsh as head the Federal Reserve reinforced expectations of a continued tighter monetary policy and reassured markets of the Fed’s independence.

It pointed out that these developments coincided with the release of strong US inflation data, with the Producer Price Index for December showing three percent year-on-year increase, exceeding expectations, while the core index, excluding food and energy, rose to 3.3 percent. It indicated that this supported the Federal Reserve’s inclination to keep interest rates unchanged and reduced bets on a near-term rate cut, contributing to the 0.74 percent rise in the US dollar index to 96.87 points and rise in the yield on 10- year US Treasury bonds to 4.24 percent. The report confirmed that the overall trend for gold remains bullish from both the technical and strategic perspectives. Technical analysis indicates that the positive trend will persist unless prices fall below $4,549, the highest level that gold reached on Dec 26. It explained that the $5,000 per ounce level is a pivotal psychological and technical zone, as a recapture of this level could pave the way for retesting the $5,180, $5,200 and $5,300 per ounce levels. It added that analysts generally agree that the current volatility reflects a healthy correction phase, following a strong and unprecedented upward trend.

These pullbacks could be buying opportunities in the medium and long terms, given the continuous support for gold, geopolitical tensions, escalating trade disputes, expansion of expansionary monetary policies globally, and central banks continuing to bolster their gold reserves. The report indicated that investors are awaiting US employment data, purchasing managers’ indices, and decisions from several major central banks next week, amidst a cautious and watchful atmosphere, anticipating sustained volatility. It affirmed that the overall outlook for gold remains positive in the medium term, driven by deep structural factors that make the precious metal one of the most prominent hedging tools at present.

Regarding silver, the report revealed that it experienced more sharp movements, with February futures contracts falling by 31 percent to close at $78.30 per ounce, resulting in a weekly loss of 22.5 percent.

Despite this decline, the report stated that silver recorded strong monthly gains of 11.3 percent in January, marking its ninth consecutive month of gains – the longest monthly winning streak in its history. The report indicated that these global movements were reflected in the Kuwaiti market. It is worth mentioning that ounce is a unit of mass used in several different systems of measurement. It is also called the troy ounce equal to 28.349 grams, while as a unit of measurement for precious metals, it is equal to 31.103 grams.(KUNA)