Gold Retreats as Dollar Strengthens, US Fed Policy in Focus

Gold prices edged lower on Tuesday as the US dollar gained strength and investors awaited key policy decisions from the Federal Reserve.

Gold and the Dollar Now

·Gold futures are now down 0.2% to $2328 an ounce. Spot gold is trading around 0.1% lower at $2319 an ounce. After rising more than one percent in the previous session. On the other hand, the dollar index is up about 0.1% to 105.080 points.

Other Metals

Silver fell 0.4% in spot trading to $27.35 an ounce. Platinum gained one percent to $963.60 and palladium rose 0.5% to $982.18.

European Stocks Rise on Strong Earnings and Rate Cut Hopes

European stocks climbed to their highest in over a month on Tuesday, supported by strong earnings reports from companies, including banks such as UBS of Switzerland and UniCredit of Italy, and upbeat sentiment surrounding potential interest rate cuts

Factors Driving European Stocks

Strong earnings reports from companies like UBS and UniCredit boosted investor confidence. Expectations of interest rate cuts from the Federal Reserve and the European Central Bank supported sentiment. Weak US jobs data released on Friday further fueled hopes for rate cuts.

Market Movers

UBS shares surged 6.3% after the bank announced a tripling of its first-quarter net profit. UniCredit, Italy’s second-largest bank, jumped about three percent. German chipmaker Infineon gained 6.5%. Medical equipment maker Coloplast of Denmark fell 5.1%.

Japanese Yen Weakens Despite Continued State Intervention Concerns

The Japanese yen continued to retreat against the dollar on Tuesday as interest rate differentials weighed on the currency, despite fresh warnings from Japanese officials following two rounds of suspected intervention-driven dollar selling last week.

Factors Influencing the Yen

Interest rate differentials between Japan and the US favored the dollar. Suspected Japanese intervention in the currency market failed to support the yen. Weak US jobs data raised expectations of further rate cuts by the Federal Reserve, widening interest rate differentials.

Market Movers

The dollar gained 0.44% to rise to 154.5635 yen, extending its gains after climbing 0.58% on Monday. The yen fell to 151.86 yen on Friday for the first time since April 10, as weaker-than-expected US jobs data exacerbated losses following Bank of Japan data suggesting that official intervention could have reached around nine trillion yen ($58.37 billion). The dollar index, which measures the performance of the US dollar against a basket of six major currencies, rose 0.04% to 105.19, after falling to 104.52 on Friday.

Oil Prices Rise on Israeli Strikes in Rafah, Ceasefire Talks Continue

Oil prices edged higher on Tuesday after Israel shelled Rafah in Gaza, while ceasefire talks with Hamas continued without reaching an agreement.

Factors Influencing Oil Prices

Concerns about potential supply disruptions due to the ongoing Israeli-Palestinian conflict supported prices. The prospect of a ceasefire agreement between Israel and Hamas limited gains. Strong demand for oil during the summer months provided some support. Rising dollar strength weighed on oil prices, making it more expensive for holders of other currencies.

Market Movers

Brent crude futures rose 23 cents, or 0.28%, to $83.56 a barrel. US West Texas Intermediate (WTI) crude futures gained 24 cents, or 0.31%, to $78.72 a barrel. Saudi Arabia raised official selling prices (OSPs) for its crude oil sold to Asia, Northwest Europe, and the Mediterranean in June, indicating expectations of strong demand this summer.

Meanwhile, the rising dollar limited the gains in oil futures as it makes the crude more expensive for holders of other currencies. The dollar index, which measures the performance of the U.S. dollar against six major currencies, rose to 105.18 points by 04:00 GMT

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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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