Gold rises as the US dollar falls; traders focus on Fed rate hike path

Gold prices gained on Monday, aided by a small drop in the US dollar and as investors reduced their bets on the Federal Reserve raising interest rates by 100 basis points this month.

By 0254 GMT, spot gold had risen 0.4% to $1,713.49 per ounce, after plunging to its lowest level in over a year last week. Gold futures in the United States rose 0.5% to $1,711.80.

The dollar fell 0.1% against its peers, pulling away from a near 20-year high reached last week and making greenback-priced bullion less expensive for buyers holding other currencies. [USD/]

"After Friday's University of Michigan inflation component came in weaker, the market scaled back the assumption of a 100-bp rate hike," said Stephen Innes, managing partner at SPI Asset Management.

According to the preliminary July consumer survey conducted by the University of Michigan, people expect inflation to be 2.8% over a five-year horizon, the lowest in a year and down from 3.1% in June.

"Central bank hawkishness has already been priced in, and with gold staying at $1,700 per ounce last week, we may see shorts squeezed a bit as hawks may be unhappy with the Fed just rising rates by 75 basis points next week."

To tackle surging inflation, Fed members hinted on Friday that they will stick to a 75-bp rate increase at their July 26-27 meeting.

At its policy meeting later this week, the European Central Bank is anticipated to hike interest rates by 25 basis points. Although gold is viewed as an inflation hedge, rising interest rates reduce the appeal of bullion, which has no interest bearing value.

Comments

What Is a Forex Lot, and How Do I Calculate It?

A lot is a unit of measurement used to standardize the size of foreign exchange transactions. Pips, which represent the fourth decimal place, are used to compare the values of two currencies. Due to the impracticality of trading a single unit, lots were created so that merchants could trade these tiny variations in bulk. An exchange or other analogous market regulator determines the value of a lot, guaranteeing that everyone trades a predefined amount and is aware of the quantity of an item they are trading when they open a position. The four sizes of lots—standard, mini, micro, and nano—are utilized to further differentiate them and provide traders with greater exposure control. Explanation of Forex Lot Dimensions The cost of a currency lot, then. This is determined by whether you are trading a standard, mini, micro, or nano lot. In order to account for minute fluctuations in a currency's value, these four standard units of measurement are used to partition forex trades. The subse...

Foreign crypto services are regulated by a new bill in the UK.

The crypto industry will be subject to increased scrutiny as a result of the amendments to the regulatory framework. Despite Prime Minister Rishi Sunak and the Conservative Party's rhetorical embrace of cryptocurrency, the industry is expected to face increased scrutiny under the forthcoming regulatory framework. The financial regulator will have more authority thanks to the new laws, which will likely restrict the activities of foreign companies in the United Kingdom. A report in the Financial Times claims that the FTX collapse has altered the direction of the UK's regulatory regime. According to reports, the Treasury is nearing completion of a set of guidelines that will allow the Financial Conduct Authority (FCA) to keep an eye on the activities and marketing efforts of cryptocurrency businesses across the country. Foreigners would be unable to easily sell cryptocurrency on the UK market. The report doesn't go into detail on the restrictions, but it's safe to assume ...

Investors ponder rate and economic forecasts as the dollar advances.

The Federal Reserve, the European Central Bank, and the Bank of England will all make significant judgments the week after next, among others. The important concern for traders and investors is whether inflation has reached its zenith, which would allow policymakers to implement lower interest-rate hikes in the coming months. The monthly consumer price index for the United States is also due the following week, one day prior to the Federal Reserve's policy meeting on December 14, and could be crucial in determining longer-term monetary policy expectations. Adam Cole, a currency strategist at RBC, stated that the U.S. CPI is the only data release that appears to have a significant impact on the broader direction of the dollar at the moment. "Until we get those central bank meetings and one key monthly U.S. data release, not much is happening," he added. The dollar was very stable versus a variety of major currencies. The euro remained unchanged versus the dollar at $1.0507...

Search This Blog