Escape from the dollar to gold

Escape from the dollar to gold
Escape from the dollar to gold
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On Thursday, spot gold prices rose to their highest levels in 9 months, supported by expectations of the end of the monetary tightening that the US Federal Reserve began implementing since March 2022, while the dollar fell near its lowest level in 8 months.

The US Federal Reserve will hold the Open Market Committee meeting next Tuesday and Wednesday, amid speculation that interest rates will increase by 25 basis points, compared to previous increases that reached up to 75 basis points in some sessions.

During early trading, Thursday, spot gold prices rose by 0.18 percent, or $3, to $1,949 an ounce. Gold is considered a safe haven in case of risks and declines in the US dollar index, which recorded 101.3 points this morning, the lowest level since last May.

Wall Street experts believe that the Fed has reached the peak of monetary tightening, and may start later this year, a phase of reduction, after strong indications of continued slowdown in consumer price growth in the United States.

The dollar index, which measures the performance of the US currency against a basket of major currencies, rose 0.1 percent to 101.65, after falling to 101.52 earlier in the session, approaching its lowest level in eight months, which it reached last week at 101.51.

Declining earnings, pessimistic expectations from US companies and a series of layoffs in the technology sector added to fears of a sharp economic contraction in the United States, prompting investors to reduce expectations about how long the Federal Reserve will need to continue to raise interest rates aggressively.

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Economists at Wells Fargo said: “With the Federal Reserve no longer driving interest rate hikes and with expectations that US economic trends will worsen, we now believe that the dollar has entered a period of cyclical decline against most foreign currencies.”

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Meanwhile, the markets are expecting the Bank of England and the European Central Bank, which also meet next week, to raise interest rates by 50 basis points. The European Central Bank is likely to continue its monetary tightening policy.

And the pound sterling traded at $ 1.2400, while the euro fell 0.03 percent to $ 1.0911, although it remained close to its highest level in nine months at $ 1.0927, which it recorded on Monday.

The Canadian dollar reached 1.3399 against the US dollar in the latest transactions, after the Canadian Central Bank raised the main interest rate yesterday, Wednesday, to 4.5 percent. In Asia, the Japanese yen rose 0.2 percent to 129.32 per dollar.

(Reuters, The New Arab)

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