Islam Saeed Books
Wednesday, April 19, 2023 02:00 AM
There is always an inverse relationship between gold And the dollar on the global stock exchange, with the decline in the dollar index that measures the performance of the federal currency against a basket of 6 major currencies during trading yesterday, Tuesday, to drop the index by 0.4% after it recorded its highest level in a week, gold rose globally above two thousand dollars, according to the Gold Billion report
The dollar found support at the beginning of the week from the rise in manufacturing activity data in New York State for the first time in five months, in addition to improving confidence among home builders in the United States for the fourth consecutive month in April, and the yield on US government bonds jumped during Monday’s session as the yield rose on The 10-year bonds increased by 2%, to record the highest level in two weeks at 3.608%, and the yield on the two-year bonds, which are more sensitive to interest changes, increased by 1.5%, and recorded the highest level in 3 weeks at 4.2048%.
The high yield on government bonds supported the dollar’s rise, but the dollar’s levels returned to decline today in light of the volatility that dominated the markets during this period, with the absence of important data from the markets.
On the other hand, global markets are following the statements of the Federal Reserve members during this week, before starting the blackout period starting from April 22nd, before the Federal Reserve meeting on May 3rd.
Looking at the opportunities for gold in the short to medium term compared to the most popular US stock index, the S&P 500, we find that gold continued to outperform the index even during the index’s last 5-week rally, which we are not used to in the markets.
The natural movement when the S&P 500 index recovers and rises is to see gold decline in return, as investments exit from the safe haven represented by gold to the risk represented by the stock index, but the recent period showed stability and cohesion of gold during the recovery of the index, this reflects the continued uncertainty in the markets and the preference Investors to remain stunned even during the risk appetite in the US stock markets, and this has happened since the last banking crisis last March.
All this indicates the consolidation of gold and its willingness to record new highs, but this may be preceded by correction and fluctuation at the beginning, in addition to waiting for a signal from the Federal Reserve during its next meeting regarding the future of monetary policy.
