The financial advisor to the Prime Minister, Mazhar Mohammed Saleh, explained why gold prices rose in local markets with the noticeable decline in the exchange rate of the dollar against the dinar.
“It is observed at the level of the local market in our country that the dollar in the secondary market is in a gradual decline against the official exchange rate, and yet we find that there is a gradual rise in gold prices in the local market,” Saleh told {Euphrat News}.
“Today, he imports gold and finances its imports at the fixed official exchange rate of the dinar against the dollar through the Central Bank platform at a price of 1320 dinars per dollar.”
Saleh explained, “Due to geopolitical tensions around the world, especially the war in Ukraine and others, it has made significant developments in gold hedging policy by some central banks in the world, which constituted an unprecedented rise in global demand for gold and led to a rise in its prices in global markets, and here it is noted that the external factor is the basis for the rise in the price of an ounce of gold in the local market.”
He continued, “International financial institutions have launched expectations of the continuation of the rise in gold prices in the coming months, and the forecast comes despite the current strength in the dollar levels, which is trading at its highest levels in 5 and a half months according to the dollar index, along with the high US government bond yields at a 5-month high in light of expectations that the US Federal Reserve is on its way to keep interest rates high for a longer period of time, which is supposed to represent a negative pressure on gold prices.”
“But the strength of global demand for gold as a safe haven under the current geopolitical uncertainty, coupled with expectations that global central banks will continue to increase their gold reserves, has prompted international financial institutions to expect more gains in gold prices during the remainder of 2024,” Saleh said.
He pointed out that “for example, the German Deutsche Bank Foundation raised its forecast for gold prices in 2024 to the level of $2,400 per ounce, and expected the price of gold to rise to $2,600 per ounce at the end of 2025. Citibank also expected that the price of gold will reach 3,000 dollars per one in the next 6 to 18 months, with gold to break through the level of $2,500 per ounce during the second half of 2024.”
He continued, “There is news circulated by global markets about an international group launching gold-denominated digital currencies with its central banks to conduct trade exchanges outside the existing currencies in the global monetary system, including China, Russia and some countries in Africa, Asia and Latin America, a trend that requires high gold hedging, which also formed an unprecedented wave of demand for the yellow metal globally.”
He said, “But from our view, adopting a global gold reserve system at the global market prices for the yellow metal will make the demand for gold grow and rise with the growth of trade and the global economy. If countries continue to hedge their reserve currencies in gold at open gold prices and restricted by production and the global limited supply of gold in the face of open demand, they will generate a cash system at a high exchange rate, perhaps it will hinder their trade competitiveness as gold-heddd countries and the exchange rates of their currencies are determined by the yellow metal.”
He pointed out that “unless those groups adopt a moderate and competitive fixed official price for the gold itself, their competitive capabilities in their international trade with the countries of the world will inevitably be threatened, and here gold will be a double-edged sword at the same time. Beware of the trade gold policies in establishing a monetary system alone, and finally until the date of May 11, 2024, the ounce of gold, which is weighs 31 grams, increased to about $2361 per ounce in global markets.”
Raghad Dahham
https://alforatnews.iq/news/صالح-يوضح-علاقة-ارتفاع-الذهب-بتراجع-الدولار-ويحذر-من-سلاح-ذو-حدين
