Gold prices are falling with the rise of the US dollar

gold-prices-are-falling-with-the-rise-of-the-us-dollar

Gold prices fell, during trading today, Friday, May 14, 2022, and remained near their lowest level in 3 months, with the dollar rising and recording its highest level in two decades.

The rise in the US currency weakened the demand for bullion priced in dollars, as the yellow metal is heading to record its fourth consecutive weekly decline.

Gold Prices Today

Gold futures prices for June delivery decreased by 0.51%, equivalent to $9.20, to reach the level of $1,813.70 an ounce.

And gold prices ended their trading yesterday, Thursday, May 12, 2022, with a decline of more than 29 dollars, recording the worst daily performance in more than a week, with the strength of the US currency.

On the other hand, the price of spot delivery of the yellow metal increased by 0.21%, at the level of $ 1819.04 an ounce.

Bullion has lost 3.1% so far this week, its biggest loss in two months.

The price of silver contracts – for July delivery – also increased by 0.41%, to reach $20.74 an ounce.

The price of palladium rose by 1.46%, recording $ 1907.38 an ounce, while the spot platinum price rose by 0.26%, at $946.90 an ounce.

Gold Market Situation

“The fall below the $1835 gold support line, and overnight sell-offs in other precious metals, leave gold vulnerable to deeper losses, and a potential test of the $1780 support an ounce,” said Oanda Chief Analyst Jeffrey Haley.

The dollar settled near a 20-year high on Thursday, May 12, 2022, as concerns persisted that the US Federal Reserve’s measures to tame inflationary pressures would hamper global economic growth, bolstering the currency’s safe-haven appeal.

Last week, the US Federal Reserve raised its benchmark interest rate by half a percentage point.

Bullion is sensitive to rising short-term interest rates and US bond yields, which raises the opportunity cost of holding them.

Gold Investments

“Nominal yields will rise as well, creating double-return problems for gold investors, as the Federal Reserve will remain hawkish until inflation indicators decline,” said Stephen Innes, managing partner at SBI Asset Management.

Gold’s recent slide almost wiped out the gains made from a safe-haven demand-driven rally after the Russian invasion of Ukraine in February, as the conflict pushed gold prices to near-record levels in mid-March.

Source: XglobalMarkets

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