Gold prices hedging up as US dollar’s upstream movement halts
Gold prices hedged up during early Tuesday trading, recovering some of the losses recorded during the previous session, in a move that reflects the halting of the US dollar’s climb. The index that measures the performance of the greenback against a basket of other major currencies hit a 20-year maximum on Monday, causing a drop of more than 1.5% in the price of the precious metal, due to the inverted correlation between the two assets. As we look ahead to the release of US inflation numbers on Wednesday, further downside risks for gold may lie ahead, as an inflation number surprising to the upside, which in this case would be anything above 8.1%, could strengthen the case for an increase in the pace of tightening by the Federal Reserve and fuel further dollar gains.
Ricardo Evangelista – Senior Analyst, ActivTrades
European markets ticked higher on Tuesday, paring some of yesterday’s losses following technical rebounds over major support levels, while investors await new macro developments. Cross asset trading continues this week as traders keep adjusting their exposure between key negatively correlated markets such as Treasuries, Stocks and the US Dollar. Market sentiment remains generally bearish for riskier assets as Chinese economic worries, the lingering war in Ukraine and monetary tightening maintain pressure on prices. However, most investors have now accepted the second part of 2022 will be marked by higher volatility and will wait for further major developments before driving prices towards more directional moves. Particular attention is likely to be put on tomorrow’s US Consumer Price Index to provide a more accurate idea of where inflation is going. Meanwhile, Energy shares are still under the spotlight as prices are reacting to the EU stance regarding oil sanctions on Russia, while investors brace for today’s EIA short-term energy outlook report this afternoon.
Pierre Veyret– Technical analyst, ActivTrades
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