Gold Drops Amid Strengthning US Dollar; Euro Under Bearish Pressure
2023.11.16 04:35
The US Dollar Rises Even Though Inflation Eases, Bringing Down XAU/USD
Gold (XAU) initially rose on Wednesday but fell after the release of the U.S. Producer Price Index (PPI) report, even though figures were lower than expected.
U.S. producer prices declined by 0.5% in October—the largest monthly decrease since April 2020—contradicting expectations of a 0.1% rise. This drop was largely influenced by a 1.4% decrease in goods prices caused by a significant 15.3% fall in gasoline prices, the first drop since May. The most recent U.S. data indicates a reduction in inflation pressures. For example, Retail Sales numbers declined for the first time in seven months. Following strong economic data, the increased, raising the gold cost for international purchasers.
Today, was rising during the Asian and early European trading sessions. Traders should focus on U.S. macroeconomic reports as they will likely drive the gold price in the near term. Weekly Jobless Claims data and Philadelphia Fed Manufacturing Purchasing Managers’ Index will come out today at 1:30 p.m. UTC. ‘Spot gold may revisit the 13 November low of $1,931.55 per ounce, as suggested by its wave pattern,’ said Reuters analyst Wang Tao.
The Euro Is Under a Bearish Pressure
The (EUR) corrected throughout Wednesday and lost 0.3% after a substantial rise on Tuesday.
Strong Retail Sales report and indications of easing inflation bolstered the US dollar, contributing to beliefs about a ‘soft landing’ of the U.S. economy. This scenario suggests the Federal Reserve might delay rate cuts and keep the base rate high longer. Eurozone Industrial Production figures showed a month-over-month decrease of 1.1% in September, a drastic difference compared to a 0.6% increase previously. Annually, the production showed a decline of 6.9%, a larger one than the prior 5.1% decrease. Lower Industrial Production figures put a substantial downward pressure on the euro.
In today’s Asian trading session, EUR/USD lost momentum as increased US dollar demand exerted bearish pressure on the pair. Market participants will closely observe the European Central Bank (ECB) President Christine Lagarde’s speech at 11:30 a.m. UTC today and the release of the U.S. weekly Initial Jobless Claims at 12:30 p.m. UTC. The data could affect the euro’s price.
