Gold Heading for Deeper Buying Levels -
The gold market was hit by the rising US dollar. Despite the hotter-than-expected inflation report this week and mounting fears of an economic recession, gold prices were falling, with most of their losses occurring after the Fed's tightening campaign began. In general, XAU/USD gold prices are retreating from a weekly loss of about 4%, in addition to their decline since the start of 2022 to date by more than 5%.
The strongest bearish price is for commodities priced in dollars because it makes them more expensive to purchase for foreign investors. The price of gold is sensitive to a high interest rate environment because it raises the opportunity cost of holding non-yielding bullion. Commenting on this, Naim Aslam, chief market analyst at AvaTrade said, "The price movement of the precious metal is largely driven by the dollar index, which is holding on to its strength." Meanwhile, the US Consumer Price Index for June will be released on Wednesday, with economists expecting a headline reading of 8.8%.
On the other hand, stocks fell, with traders preparing for a heated inflation reading and the start of a major earnings season that may provide clues as to whether the US economy is heading into a recession. The sell-off in shares of huge companies such as Tesla Inc. and Apple Inc. weighed on the stock market - which saw its lowest trading volume in 2022. Shares of Twitter Inc. fell.
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