Gold price climbed above $2,470 and gathered bullish momentum as major currency pairs fluctuated in tight ranges on the first day of the week. Investors are eagerly awaiting the release of the July Producer Price Index (PPI) data from the US and August Economic Sentiment data for Germany and the Euro area from the ZEW Institute during the European session.
The US Dollar (USD) was the strongest against the Japanese Yen in the last 7 days, as shown in the percentage change table against major currencies. The US Dollar Index (DXY) closed virtually unchanged on Monday, trading slightly above 103.00 in the European morning on Tuesday. Israel Defense Forces expect an attack by Iran by Thursday, adding to geopolitical tensions.
The UK’s Office for National Statistics reported a decline in the ILO Unemployment Rate to 4.2% in the three months to June, below market expectations. GBP/USD gained traction after the data release, trading above 1.2800. EUR/USD registered modest gains on Monday and was relatively quiet below 1.0950 on Tuesday morning.
Crude oil prices rose sharply on Monday due to ongoing conflicts in the Middle East and reports of Saudi Aramco looking to lower its oil output from September. Gold also benefited from retreating US Treasury bond yields, gaining more than 1.5% on Monday and reaching $2,480 during Asian trading hours on Tuesday.
Central banks are the biggest holders of Gold, adding 1,136 tonnes worth around $70 billion to their reserves in 2022. It is widely seen as a safe-haven asset, hedge against inflation, and inversely correlated with the US Dollar and US Treasuries. Gold price movements can be influenced by geopolitical instability, interest rates, and the strength of the US Dollar.
In conclusion, Gold continues to be a sought-after investment during turbulent times due to its safe-haven status and inverse correlation with major assets like the US Dollar. With central banks adding to their reserves and geopolitical tensions on the rise, Gold prices are likely to remain elevated in the near future. Investors should keep an eye on economic data releases and global events that could impact the precious metal’s price movements.
