Gold prices are on the rise
Gold prices are rising during early Friday trading. The precious metal is on track for its best week since November, with its gains reflecting the losses of the US dollar due to the inverted correlation between the two assets. The US currency lost more than 1% in relation to other majors over the course of the week, as the markets, having already priced in the tightening of policies by the Federal Reserve into the value of the greenback, now shift their focus onto other central banks that haven’t yet started to cut back on stimulus. In such a scenario there may be scope for further dollar weakness and therefore, gold gains.
The US dollar continued to slide in relation to other major currencies during early Friday trading and is on track to close the week with the worst performance since late 2020. With tapering of asset purchases, several interest rate hikes and the intention to reduce the size of the Fed’s balance sheet already baked into the value of the greenback, the week was disappointing for dollar bulls, who are still digesting the temperance of Jerome Powell’s testimony to congress and the fact that US inflation didn’t, this time around, exceed expectations and was right on the money, at 7%. With investor’s attention now focusing on other major central banks – those that haven’t yet started to tighten their monetary policies -there may be further downside ahead for the dollar once tightening gathers pace elsewhere.
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