Chat with us, powered by LiveChat

Choose country & language:

Close Icon

Gold falls on strong US dollar

Home >  Daily Market Digest >  Gold falls on strong US dollar

detail_image_market
author_img

Written by:
Myrsini Giannouli

30 June 2022
Share the article

Gold prices plummeted below $1,820 per ounce on Wednesday, weighed down by the dollar’s rally, falling as low as $1,812 per ounce. If the price of gold decreases, support may be found near $1805 per ounce and further down at $1,786 per ounce, while resistance may be found around 1,870 per ounce and higher up at $1,920 per ounce.

The dollar gained strength on Wednesday on hawkish Fed rhetoric, with the dollar index climbing above 105.1. US Bond yields retreated a little, with the US 10-year treasury note yielding approximately 3.1% on Wednesday. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold. 

An increasing number of major Central Banks, including the Fed and the BOE, are moving toward a tighter fiscal policy to tame soaring inflation rates. On Wednesday, Fed Chair Jerome Powell’s hawkish comments increased the chances of a steep rate hike at the Fed’s next policy meeting, reducing the appeal of gold.

Gold is supported though, by the ongoing crisis between Russia and Ukraine. Increased risk aversion sentiment due to the war in Ukraine has boosted gold prices over the past few months. In addition, G7 leaders have decided to take further action against Russia by imposing an embargo on Russian gold exports. Gold exports provide revenue of tens of billions of dollars and, if the ban on Russian gold is implemented, it can boost gold prices considerably.

Stalling global economic growth gives rise to recession fears, supporting the price of gold. In the past few weeks, recession fears have mounted, as many countries show signs that their economy is slowing down. At the beginning of the year, the global economy was on the road to recovery from the effects of the pandemic. The war in Ukraine however, has set economic growth back, with prices of energy and food rising and inflation reaching peak levels, crippling economic growth. 

High inflation rates are also known to support the price of gold, which is often used as an inflation hedge, and with global inflationary pressures increasing, the gold price is boosted. High inflation, however, is a two-edged sword for the price of gold, as it increases the chances of Central Banks raising their interest rates, which reduces the appeal of gold. 

XAUUSD 1hr chart

TRADE GOLD

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

author_img

Written by:
Myrsini Giannouli

Share the article:

Latest news

main_image_market

Dollar steady ahead of key US economic data

Myrsini Giannouli 28 March 2024
main_image_market

Gold prices advance as US treasury yields decline

Myrsini Giannouli 28 March 2024

Oil prices rise on lower-than-expected US stockpiles

Myrsini Giannouli 28 March 2024

Bitcoin struggles to maintain key $70,000 level

Myrsini Giannouli 28 March 2024
Why TopFX
10-years
13+ years

industry presence
as a Liquidity Provider

Spreads
Spreads
from 0.0 pips

and reliable execution

Segregated
Segregated

client funds

First-class
First-class

customer support

Open your Live Account in 3 Steps
Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!

IMPORTANT

The website you are now viewing is operated by TopFX Global Ltd, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.

If you wish to proceed please confirm that you understand and accept the risks associated with trading with a non-EU entity (as these risks are described in the Own Initiative Acknowledgment Form and that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX Global Ltd or any other entity within the Group.

Don't show this message again

Cookies on TopFX

The TopFX website uses cookies to optimise user experience.

These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.

Manage Preferences

You can customize your selection of which cookies you want to accept.

  • Essential

    These cookies are necessary for the website to function correctly and cannot be switched off.

  • Functional

    Functional cookies allow the website to remember users' preferences and the choices you make on the website such as username, region, and language.

  • Marketing

    These cookies are used to track visitors across our websites and show you more relevant ads. Marketing cookies also include third-party cookies from partners. For more information relating to data protection & collection please view our Privacy Policy and Cookie Disclosure.