The US currency reached its maximum in 20 years, becoming the preferred safe haven amidst the growing economic risks of recent times, at the expense of gold. And it managed to break the parity with the euro that occurred in the previous round.
“The strengthening dollar is pushing gold lower. Following the consumer inflation data, traders have raised their expectations from a 75 basis point rate hike to a 100 basis point hike,” hurting the Prayed, said Philip Streible, chief market strategist at Blue Line Futures in Chicago.
“Gold is unlikely to see a rally unless inflation deteriorates enough to stop interest rate hikes or if other central banks start to be as aggressive as the Fed, and that can weaken the dollar,” Streible added.
Although considered a hedge against inflation, gold’s appeal tends to diminish when rates are highsince the bullion does not pay interest.
Wednesday’s data showed that Consumer prices in the United States rose, marking the largest annual increase in inflation in 40-and-a-half years.
For his part, Christopher Waller, of the Fed, said that “Markets may have gotten ahead” when assessing a rate hike of 100 basis points for July. Weekly jobless claims in the United States rose for the second week in a row, suggesting some cooling in the labor market.
In physical markets, exports of spot gold jewelery from India, the second largest consumer, increased in May.
Meanwhile, spot silver fell 4.7% a u$s18.28 the ounce, platinum fell 1.2% a $844.95 and palladium yielded a 3.8% a $1,899.71.
Source: Ambito
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