Dollar Pressures Gold Again, Possible Drop to $2015 an Ounce

Gold prices fell globally during today’s trading session, coinciding with the rise of the US dollar index.

Meanwhile, traders are awaiting key inflation data and statements from Federal Reserve officials this week to determine when the central bank is likely to cut interest rates.

US Treasury 10-year yields fell to 4.2914% from 4.3150% on Tuesday, while the dollar index rose during today’s trading session, hovering near 104 points.

Gold and the Dollar Now

Gold futures fell 0.32% to $2037 an ounce.

Spot gold fell 0.1% to $2028 an ounce.

On the other hand, the US dollar index rose 0.18% to 103.950 points.

Other Metals

Spot platinum fell 0.1% to $887.20 an ounce, while palladium fell 0.5% to $931.57 an ounce. Silver rose 0.1% to $22.45 an ounce.

Oil Rises More Than $1 on Expectation of OPEC+ Production Cut Extension. Oil prices rose more than $1 a barrel on Tuesday after sources said the OPEC+ alliance is considering extending a voluntary oil production cut in the second quarter, providing further support for prices.

Brent crude futures rose $1.12, or 1.4%, to $83.65 a barrel. US West Texas Intermediate crude futures rose $1.29, or 1.7%, to $78.87 a barrel at settlement.

OPEC and its allies, led by Russia, known as OPEC+, agreed in November to a voluntary total cut of about 2.2 million barrels per day in the first quarter of this year, led by Saudi Arabia, which renewed its voluntary cut. Two sources told Reuters that the group may keep the additional cut until the end of the year.

Prices were also supported by cautious statements from Israel and the Islamic Resistance Movement (Hamas), as well as from Qatari mediators, about progress towards reaching a truce in Gaza, after US President Joe Biden said he believed a ceasefire could be reached in less than a week to stop the war before Ramadan. They were also supported by statements from the spokesman for the Yemeni Houthi movement, who said that operations in the Red Sea will not stop unless the Israeli “aggression” on Gaza ends and the siege on the Strip is lifted.

Houthi missile and drone attacks on international shipping have raised the cost of transporting energy products and contributed to a tight market. The two crudes rose more than 1% at settlement on Monday after falling 2-3% last week as markets increasingly expected interest rate cuts to take longer in the future.

Euro Retreats from 3-Week High Awaiting Inflation Data

The euro retreated in the European market on Wednesday against a basket of global currencies, continuing its losses for the second consecutive day against the US dollar, moving away from its three-week high, due to correction and profit-taking activities.

Investors are eagerly awaiting the release of very important data on key inflation levels in major European countries and the euro zone as a whole on Thursday and Friday of this week, which will provide strong evidence for possible cuts in European interest rates this year.

The US currency has seen a recovery, ahead of the release of US GDP data for the fourth quarter of last year, which will provide new pricing for current expectations of Federal Reserve interest rates.

Euro Exchange Rate Today

The euro fell 0.2% against the dollar to ($1.0825), from an opening price of ($1.0844), and recorded a high of ($1.0846). The euro ended Tuesday’s trading 0.1% lower against the dollar, in its second loss in three days, due to corrections from a three-week high of $1.0888.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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