The dollar fell 0.3%, making bullion cheaper for foreign investors with other currencies, while bond yields fell to their lowest level in a week.
European stocks also tumbled, following a sharp sell-off on Wall Street the day before, prompting investors to seek the safety of gold.
“The dollar is going down and it’s quite natural for gold to appreciate,” Kinesis’s Carlo Alberto De Casa said. “Unless the dollar remains tight and inflation continues to put up a fight, I don’t see any other reason for further big declines in gold,” he added.
The price of gold fell to a nearly four-month low earlier this week and is up nearly 2% after the dollar retreated from 20-year highs.
Gold’s reputation as a hedge against inflation is being offset by the aggressive policy adopted by central banks to fight rising prices. Gold, which does not bear interest, tends to fall out of favor with investors when interest rates rise.
In other precious metals, spot silver was up 0.7% at $21.53 an ounce; platinum was up 0.1% at $935.93; and palladium fell 1.8% to $1,979.38.
How much is the euro trading today
The euro rose on Thursday as investors priced in the possibility of the European Central Bank tightening short-term interest rates, while the dollar, considered a safe-haven asset, took a breather after significant gains in the sessions. previous.
Currency markets are pricing in the possibility of the ECB raising rates by about 105 basis points (bps), while US currency markets are still pricing in about 200 bps of Fed rate hikes by December 2022.
Risk appetite in the forex market is fragile as stocks fell after Wall Street’s worst day since mid-2020, amid warnings from some of the world’s biggest retailers that underscored the harshness of inflation.
However, some analysts have positive views on the global economy and risk currencies on expectations of an easing of restrictions in China due to COVID-19.
“We are relatively bullish on risk currencies against the dollar, including the euro and sterling, as we think the market’s concern about global growth is excessive,” said Ebury’s Matthew Ryan.
“We will see a significant rebound once we reach a stage where China begins to materially undo its COVID restrictions,” he added. “We think the world economy is likely to hold up somewhat better than some economists expect this year.”
The dollar index, which compares the greenback to a basket of six major currencies, fell 0.3% to 103.5 points after gaining 0.55% on Wednesday, ending a three-day losing streak. .
The euro improved 0.3% to 1.0488 units against the dollar; the Swiss franc appreciated 1% against the euro and the dollar; and the yen, which lost ground against the dollar in March and April, gained 0.4% to 127.6 units.
Source: Ambito
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