Gold prices drop with the continuous rise of the US dollar
Last Updated on February 6, 2022
Gold prices fell during the trading session today in the European market, to deepen their losses for the third consecutive session, and are close to recording a new weekly loss, the largest since last November. This came due to the broad rise in the levels of the US dollar against most global currencies after the Federal Reserve announced The plan to tighten monetary policy and raise interest rates in the United States.
By 09:40 GMT, the spot price of gold was down by 0.4%, to trade around the level of 1789.91 US dollars per ounce, from the opening level of today’s session at 1979.48, and reached the highest price at 1799.40 dollars per ounce.
In the US futures contracts, gold fell by about 0.01%, recording the level of 1794 dollars an ounce.
USD index continue rising
In terms of the US dollar index trading, the index rose during today’s session by 0.2% to maintain its daily gains for the fifth consecutive session, thus recording its highest level in 18 months at 97.42 points, reflecting the continued purchases of the US currency against the majority of major and minor currencies.
Gold is generally viewed as one of the best safe-haven inflation hedges, but it is highly sensitive to rising US interest rates, which increases the opportunity cost of holding the non-yielding metal.
A Reuters poll indicated that gold prices will decline during 2022 and 2023, with the major global central banks raising interest rates.
The US Federal Reserve said at the conclusion of its first monetary policy meeting in 2022 that it will end its bond-buying program by next March, and that it is preparing to raise interest rates in the United States as soon as possible in light of high inflation.
Traders in the Federal Reserve’s futures market have moved to price the possibility of a five-rate hike this year in the wake of Powell’s comments on Wednesday.
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