July 15, 2022 5:53:50
XAU/USD beating continues for the fifth consecutive week. The precious metal loses its sheen as investors are shunned from the asset. The exponential rise in the US dollar since March 2022 brings a rout in the financial market.
Why USD is rising?
The U.S dollar index (DXY) topped the 109.00 mark on Thursday, refreshing a 20-year high. The U.S dollar renewed its ‘king’ of the market status in recent times. Global recessionary fears, historic high-level inflation, and Fed’s aggressive tightening bet replenish the safe-haven status of the U.S dollar.
China, the world second largest economy posted pessimistic GDP data on Friday. The economy advanced 0.4% YoY in Q2 0f 2022 much below a 4.8% growth in Q1.
UK inflation hit a record high of 9.1% in May, a 40-year high, and the annual inflation in the Eurozone hit the ceiling of 8.6% in June. The U.S annual inflation soared to 9.1%, beating the market expectations of 8.8%.
The U.S benchmark 10-year treasury yields remained steady above 2.9% weighing pressure on the precious metal. A higher treasury yield boosts the dollar demand.
The financial market is bracing up for an unexpected rate hike from the Fed in its meeting later in the month. The recent inflation and hot job data urge a 100bps rate hike as compared to 75.
Investors braced for the U.S retail sales data later in the day.
As of writing, XAU/USD reads at $1,706.55, up 0.04% for the day.
Gold seeks a bounce back toward $1,720
On the hourly chart, XAU/USD bounced back after briefly testing the $1,697 mark on Thursday. The levels were last seen in April 2021. It hovers in a very tight range of $1,706-$1,716 on Friday.
The 50-day SMA acted as an upside filter at $1,721. The formation of the ‘Doji’ candlestick near the lower levels indicates indecision among traders.
However, a break below the session’s low would intensify the selling toward $1,690-80.
Although Moneta Markets aims to ensure that the information/material is accurate, it cannot be held responsible for any omissions/miscalculations or mistakes as it does not warrant the accuracy of such material. Any material and/or content provided herein is intended for educational purposes only and does not constitute investment advice on how clients should trade as it does not take into consideration your personal objectives, financial circumstances or needs. Please seek independent advice before making any trading decisions. Reliance on such material is solely at your own risk and Moneta Markets cannot be held responsible for any losses resulting directly or indirectly from such reliance. Any reference to figures/statistics or numbers refers to the group of companies of Moneta Markets. Please refer to the legeal documents should you require more information.
