Financial Breakfast on June 20: The rise in the U.S. dollar drags down gold prices, focusing on Powell’s congressional testimony
On June 20, the U.S. dollar experienced a climb, causing gold prices to fall. This movement in the market was influenced by investors digesting recent monetary policy decisions made by various central banks and awaiting the Bank of England’s interest rate decision, which is scheduled to be announced on Thursday. Due to the U.S. holiday, trading in the markets was relatively thin.
In terms of commodities, U.S. gold futures fell by 0.4% to $1,964.00, while Brent crude oil dropped by 0.68% to settle at $76.09 per barrel. U.S. crude futures also experienced a decline of 0.9% to $71.17 per barrel.
The decrease in gold prices on Monday was attributed to the rebound of the U.S. dollar from its previous session lows. Traders are eagerly awaiting Federal Reserve Chairman Jerome Powell’s testimony on Capitol Hill later in the week, as it is expected to provide insights into future interest rate decisions.
Last week, gold saw a 0.2% increase as traders speculated that the Federal Reserve would raise interest rates in July. However, the Fed ultimately decided to keep rates unchanged, but sent a hawkish signal. Powell’s congressional testimony will be closely watched for any indications regarding future rate hikes.
In addition to Powell’s testimony, the market is also anticipating the release of the European Union’s inflation report on Wednesday. It is widely expected that the European Central Bank will raise interest rates in July. Furthermore, the Bank of England is expected to announce a 25 basis point interest rate hike on Thursday.
Spot silver fell by 0.7% to $23.98 per ounce, platinum dropped by 0.5% to $977.25, and palladium experienced a decline of 0.7% to $1,400.65.
Oil prices also fell on Monday due to concerns about the global economy outweighing the positive impact of OPEC+ production cuts and a continuous decline in the U.S. oil and gas rig count. Experts are closely monitoring the performance of the global economy in the second half of the year and the ability of the U.S. and Europe to avoid a slowdown amidst higher interest rates.
Furthermore, rising Iranian oil exports have put downward pressure on prices. Despite U.S. sanctions, Iran’s crude exports and oil production are expected to reach record highs in 2023, contributing to increased global supply.
In terms of foreign exchange, the U.S. dollar climbed on Monday, while sterling traded near a 14-month high. Investors are analyzing the monetary policy decisions made by various central banks last week and eagerly awaiting the Bank of England’s interest rate decision on Thursday. The movement in currency markets has been heavily influenced by global central banks’ efforts to combat high inflation. The dollar index rose by 0.2% to 102.480, still not far from its one-month low of 102.00. Sterling, on the other hand, was last down 0.2% at $1.27960.
The Bank of England is expected to raise interest rates by at least 25 basis points, as the central bank aims to address inflation that is four times its target. Money markets are currently pricing in a 72% chance of a 25 basis point hike and a 28% chance of a 50 basis point hike. The Federal Reserve, European Central Bank, and Bank of Japan have all made recent decisions regarding interest rates.
In summary, the rise in the U.S. dollar has led to a decline in gold prices. Investors are closely monitoring Powell’s congressional testimony for insights into future interest rate decisions. Additionally, the Bank of England’s interest rate decision and the European Union’s inflation report are expected to impact the market. Oil prices have fallen due to concerns about the global economy, while foreign exchange markets are influenced by central banks’ efforts to combat inflation.Financial Breakfast on June 20: The rise in the U.S. dollar drags down gold prices, focusing on Powell’s congressional testimony
On June 20, the U.S. dollar experienced a climb, while gold prices fell due to thin trading caused by the U.S. holiday. Investors were digesting recent monetary policy decisions by central banks and eagerly awaiting the Bank of England’s interest rate decision on Thursday. U.S. gold futures dropped by 0.4% to $1,964.00, while Brent crude oil fell by 0.68% to settle at $76.09 a barrel. U.S. crude futures also fell by 0.9% to $71.17 a barrel.
The dollar index rose from a one-month low, and analysts are questioning how gold can break out of its current range of $1,940 to $1,980. Gold prices rose by 0.2% last week as traders speculated on a potential interest rate hike by the Federal Reserve in July. Markets are eagerly awaiting Federal Reserve Chairman Jerome Powell’s congressional testimony on Wednesday and Thursday for further clues on future interest rates.
In addition to Powell’s testimony, the European Union will release its inflation report on Wednesday. The market has already factored in the expectation that the European Central Bank will raise interest rates in July. The Bank of England is also expected to announce a 25 basis point interest rate hike on Thursday.
Meanwhile, oil prices fell on Monday due to economic concerns outweighing the impact of OPEC+ production cuts and a decline in the U.S. oil and gas rig count for the seventh consecutive week. The oil market is closely monitoring the global economy’s performance in the second half of the year and the ability of the U.S. and Europe to avoid a slowdown amidst higher interest rates. Rising Iranian oil exports have also contributed to the decline in prices.
In the foreign exchange market, the dollar climbed on Monday, and sterling traded near a 14-month high. Movements in currency markets have been influenced by central banks’ efforts to curb high inflation. The dollar index rose by 0.2% to 102.480, and the Bank of England is expected to raise interest rates by at least 25 basis points on Thursday. Sterling traded near a 14-month high against the dollar, reflecting market expectations of faster interest rate hikes in the U.K. compared to other major economies.
Overall, the rise in the U.S. dollar has led to a decline in gold prices, while the oil market is affected by economic concerns and rising Iranian oil exports. Currency markets are closely watching central banks’ efforts to curb inflation, with the Bank of England expected to raise interest rates.
How did the rebound of the U.S. dollar impact the decrease in gold prices on June 20?
The decrease in gold prices on June 20 can be attributed to the rebound of the U.S. dollar from its previous session lows. Traders are eagerly awaiting Federal Reserve Chairman Jerome Powell’s congressional testimony later in the week, as it is expected to provide insights into future interest rate decisions.
Last week, gold saw a slight increase as traders speculated that the Federal Reserve would raise interest rates in July. However, the Fed ultimately decided to keep rates unchanged but sent a hawkish signal. Powell’s testimony will be closely watched for any indications regarding future rate hikes.
In addition to Powell’s testimony, the market is also anticipating the release of the European Union’s inflation report on Wednesday. It is widely expected that the European Central Bank will raise interest rates in July. Furthermore, the Bank of England is expected to announce a 25 basis point interest rate hike on Thursday.
Overall, the rise in the U.S. dollar has led to a decline in gold prices. Investors are closely monitoring Powell’s congressional testimony for insights into future interest rate decisions. Additionally, the Bank of England’s interest rate decision and the European Union’s inflation report are expected to impact the market.
“The rise in the US dollar has prompted a decline in gold prices, highlighting the strong inverse relationship between the two. Investors should closely monitor these fluctuations as they may offer potential trading opportunities.”