Global markets: gold declined and the dollar rebounded on the impact of high oil prices
Gold prices fell, the dollar rose again, and oil continued to rise today, Tuesday, amid investors’ assessment of the expected path of monetary policy in the United States, after data on the decline in manufacturing activity there and amid inflationary risks raised by production cuts from the OPEC + group.
Markets expect by 58.7%, according to Archyde.com, that the Federal Reserve (the US central bank) will raise interest rates by a quarter of a percentage point in May, but the possibility of a rate cut later in the year also rose.
Futures pricing shows that markets also expect the Federal Reserve (the US central bank) to start cutting interest rates in September at the earliest and through the end of the year, when interest rates are expected to be just over 4.3% by December.
Gold dip
In the metals marketsGold in spot transactions fell 0.3% to $1978.10 an ounce by 05:49 GMT, while US gold futures fell 0.2% to $1997.30.
The dollar index rose 0.2%, which makes the precious metal more expensive for buyers holding other currencies.
Gold is considered a tool to hedge against inflation, but high interest rates also raise the opportunity cost of owning it, as it does not generate a return.
“In the short term (Q2), we expect gold to derive more support from a scenario where inflation and interest rates may peak,” Edward Meir, metals analyst at Marex, said in a note.
He added, “If our expectations are correct, this is expected to lead to a decline in the dollar and pave the way for a larger upward movement (for gold).”
Silver lost 0.9% in spot transactions, recording $23.79 an ounce, while platinum fell 0.3% to $982.62, and palladium fell 0.4% to $1453.64.
Dollar recovery
And in the currency marketsThe US dollar regained some of its gains during the Asian trading session after Monday’s tumble, which was driven by data pointing to a further slowdown in the US economy.
The British pound and the New Zealand dollar recorded their highest levels in several weeks in early Asian trading on Tuesday, but they fell later.
The pound sterling was last down 0.05% at $1.2410, after touching its highest level since late January earlier in the session at $1.2425.
The New Zealand dollar rose 0.2% to $0.6310, its highest level since mid-February, and it was last settled at $0.6301.
The dollar index rose against a basket of currencies by 0.17% to 102.20, after declining by more than 0.5% on Monday.
The euro fell 0.11% to $1.0891, after gaining 0.56% on Monday. The dollar rose against the Japanese yen 0.29% to 132.84.
The Australian dollar fell 0.4% to $0.6766 today, Tuesday, after the central bank kept interest rates the same.
high oil
and in energy marketsOil prices rose in Asian trading, today, Tuesday, after the OPEC + decision to cut more production shook the markets yesterday, while investors’ attention turned to the prospects for demand and the impact of high prices on the global economy.
Brent crude futures rose 41 cents, or 0.5%, to $85.34 a barrel, by 0400 GMT.
West Texas Intermediate crude futures also rose 41 cents, or 0.5%, to $80.83 a barrel.
Both benchmarks jumped by more than 6%, yesterday, Monday, after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, in what is known as the OPEC + alliance, shook the markets by announcing on Sunday plans to cut production targets by another 1.16 million barrels per day. .
The latest pledges raise the total volume of OPEC+ cuts to 3.66 million bpd, including 2 million bpd in October, according to Archyde.com calculations, which is equivalent to about 3.7% of global demand.
“The buying wave sparked by the OPEC + decision to cut production in anticipation of a significant rise in prices has calmed down and the market’s attention has shifted to future demand expectations,” said Hiroyuki Kikukawa, head of (NS Trading) affiliated with Nissan Securities.
He added, “In the short term, demand is expected to rise due to the summer driving season, but higher oil prices may increase inflationary pressures and prolong interest rate increases in many countries, which may weaken demand.”
OPEC+ production constraints have prompted most analysts to raise their forecast for Brent crude prices to around $100 a barrel by the end of the year. Goldman Sachs raised its forecast for Brent to $95 a barrel by the end of this year, and to $100 for 2024.
(Archyde.com, The New Arab)