Strange scene: Gold and the dollar explode Investing.com’s “Drums of War and Federalism”

© Reuters.

Investing.com – Hours before the highly anticipated interest rate decision, which pushed gold to its lowest level in the last two and a half years in the last period.

On the other hand, it has led to the highest levels of the last 20 years and it appears that fluctuations in risk appetite will not stop in global markets, as the prices of the yellow metal have risen in conjunction with the rise in the dollar index. USA.

Fears of an escalation of confrontation between Russia and Western powers, following President Putin’s announcement some time ago, of a partial mobilization of military forces in Russia, are likely to be grounds for pushing the followers towards safe havens.

Today, Wednesday, markets are awaiting the US Federal Reserve’s interest rate decision, which is expected to see a hike in the 75 basis point range, without ruling out a rise in the 100 basis point range.

gold now

The US dollar has risen in these moments by more than $ 10 in one go, or 0.7%, to reach levels close to $ 1676 an ounce.

And the price of gold in futures contracts has risen by more than $ 10, hitting levels above $ 1680 an ounce, an increase of about 0.7% at these trading times today, Wednesday.

dollar now

On the other hand, the dollar index rose sharply to its highest level in more than 20 years, towards the 111-point levels, to approach the 110.87-point levels, at the start of trading on Wednesday.

While the dollar index has risen in these moments by more than 0.4%, reaching levels of 110.7 points against a basket of major currencies, during today’s trading.

At the same time, it fell 0.55% to levels of € 0.991 per dollar, and fell 0.1% to levels of 143.57 yen per dollar, and the pound fell 0.3% and 0. ,2%.

In contrast to the dollar’s rise, the 10-year yield has declined but is still trading near the 11-year peak at levels above 3.52%.

expectations of interest

The US Federal Reserve – at the conclusion of the two-day policy meeting ending today – is expected to raise interest rates by 75 basis points, amid market participants’ expectations of a 19% probability of a 100 basis point increase.

“High Treasury yields and a strong dollar on expectations of more aggressive Fed policies have been headwinds for gold prices,” said IG market analyst Yip Jun Rong.

He added: “More aggressive expectations from policy makers than current market expectations may reveal a higher stance towards interest rates, which may not have been well received before.”

gold reserves

Higher interest rates affected the attractiveness of gold; The opportunity cost of holding non-productive bars increases.

Gold prices have been negatively impacted by the appreciation of the US dollar, which usually makes precious metals more expensive for other currency holders.

The 10-year US Treasury yield rose above 3.5%, close to its highest level in more than 11 years since 2011.

war drums

The Russian president threw a new bomb in the postponed speech, which should have been a few hours ago, following the news of the leadership of the separatist Donbass region for a referendum on the determination of fate.

Meanwhile, President Vladimir Putin addressed a speech to the Russian people in which he talks about the future of the military operation and the referendums on the accession of the regions of Donetsk, Lugansk, Kherson and Zaporozhye to Russia.

In the speech, the Russian president gave orders to the Russian army to implement the partial military mobilization process and ordered the Russian government to step up support for the army.

Russian President Vladimir Putin said: “The partial mobilization decree provides for additional measures to implement the state defense order.” Russian President Vladimir Putin signed a decree on partial mobilization and the document was posted on the Kremlin website.

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