Since last Friday the U.S. dollar has traded under pressure losing value on Friday, Monday, and Tuesday. During the same period gold has been trading under mild selling pressure holding on to a price point just above $1700 per ounce. Recently the dollar hit a high just above 109 on Thursday, July 14 before trading lower for three consecutive days. However, even with dollar weakness for three of the four last trading days gold has not gained any significant value.
Today the dollar had incremental price gains. As of 5:10 PM EDT, the dollar index is currently fixed at 106.925 after factoring in today’s gain of 0.35%. Concurrently, gold futures lost $16.40 or 0.96%. This clearly illustrates that today's dollar strength has been adding to the selling pressure of gold, but only by a percentage of the overall decline in gold today.
Recent dollar strength and weakness in gold can be directly attributable to the Federal Reserve’s hawkish monetary policy which has raised rates at each consecutive FOMC meeting since March of this year. Gold traded to its highest level this year in March trading at $2078. This corresponds to the first interest rate hike by the Federal Reserve which also occurred in March. In the last four months, gold has dropped by $383 losing almost 18 ½% in value.
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Source: KitcoNewsNOW - 🏆 13. / 78 Read more »