Markets are awaiting US central bank meetings: the decline of the dollar and the rise of gold
Gold rose today, Tuesday, with the decline of the dollar, but the price movement remained in a narrow range, as dealers await the release of US inflation data later today and the decision of the Federal Reserve (Central Bank of America), tomorrow, Wednesday, regarding monetary policy.
Economists polled by Reuters had expected the US consumer price index for May to show a slowdown in year-on-year inflation to 4.1%, compared to 4.9% in April, and a monthly increase of 0.2%, down from 0.4% in the previous month.
According to CME Group’s Videowatch service, 81% of traders expect the Federal Reserve to keep interest rates unchanged, while 19% of them expect to raise interest rates by 25 basis points.
The European Central Bank will announce its decision on interest rates on Thursday, and is widely expected to raise them by 25 basis points. However, the Bank of Japan (the central bank), which will announce its decision on Friday, is expected to continue its monetary easing policy.
The rise of gold
In the precious metals markets, gold rose in the spot market by 0.2%, to $ 1960.59 an ounce, by 04:26 GMT. US gold futures rose 0.3% to $1,974.60.
“The market is waiting for US consumer price index data and the Federal Reserve’s Monetary Policy Committee meeting to set a clearer direction for gold prices,” said Michael Langford, director at AirGuide, a corporate advisory firm.
He added, “There is no reason for gold to outperform other asset classes, regardless of the Federal Reserve’s monetary policy decision-making process.”
Among other precious metals, spot silver rose 0.4% to $24.1395 an ounce. Platinum rose 0.5% to $994.47. Palladium rose 0.9% to $1,361.62.
The dollar fell
In the currency markets, the dollar recorded a decline today, Tuesday, but it is trading within a narrow range, but it is near its lowest levels in several weeks against the risk-sensitive Australian and New Zealand dollars.
The Australian dollar last traded at $0.6753, after hitting a one-month high of $0.6774 in the previous session.
The New Zealand dollar settled at $0.6123, remaining close to the peak it recorded yesterday at $0.6153, the highest since May 24.
The British pound rose 0.07% to $1.2520, after climbing to a one-month high of $1.2600 on Monday, on the back of hawkish statements by Bank of England policymakers.
The euro rose 0.04% to $1.0760, with traders also focusing on the European Central Bank’s rate decision on Thursday.
The dollar index recorded a slight increase to 103.59, after declining to 103.24 yesterday, the lowest level since May 23.
The ruble collapsed
Also in the currency markets, the Russian ruble fell today, Tuesday, to its lowest level against the dollar in ten weeks, with the resumption of work in the local markets after a long weekend, affected by the drop in oil prices, geopolitical pressures, and demand for foreign currencies.
The ruble fell 0.5% to 83.07 against the dollar by 06:15 GMT, its lowest level since April 7.
It fell 0.9% to 89.74 against the euro, its lowest level in more than 6 weeks. It fell 0.1% to 11.58 against the Chinese yuan.
Brent crude, a global benchmark for Russia’s main export crude, rose 0.6% to $72.26 a barrel. The price of Brent crude fell sharply in the past few sessions from a level of about $78.
The ruble was not affected much by the Russian central bank keeping interest rates at 7.5% on Friday, but the bank sent its strongest signal yet that it may raise rates this year, saying that “this possibility has increased with the rise in inflationary pressures.”
(Reuters, The New Arab)
2023-06-13 08:39:26
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