Gold growing on back weak dollar
2022.12.13 11:22
Gold growing on back weak dollar
Budrigannews.com – As U.S. consumer price data indicated a steady cooling in inflation from 40-year highs, the yellow metal’s futures and physical spot prices increased by approximately 2% on Tuesday to reach near six-month highs above the crucial $1,800 an ounce level.
By 10:32 ET (15:32 GMT), the benchmark contract for gold futures was at $1,826.95, up $34.65 or almost 2%. Comex gold reached a session high of $1,836.80, its highest level since June 27 and a close to six-month high.
Some traders monitor the more closely than futures, and it was up $33.44 or about 2% at $1,814.87 an ounce.
Sunil Kumar Dixit, chief technical strategist at SKCharting.com, stated, “For spot gold, at this point, $1,810-$1,800-$1,790 become the immediate support zone and consolidated price action is looking at the next major resistance and target of $1,845.”
From its low of $1,600 at the beginning of October, gold has gained approximately $200. It has decreased in just one week over the past seven weeks.
The fall in the, which has lost nearly 8% of its value since October, has helped the rebound. The index, which compares the dollar to a basket of six currencies, fell 1.4% on Tuesday alone, the most in a single day since November 11.
More Winter storms hit in the US
The Labor Department announced on Tuesday that U.S. consumer prices increased by 7.1% in the year to November, indicating the smallest inflationary growth in nearly a year and a victory for the Federal Reserve’s plans to slow down rate hikes after aggressively increasing them to reduce price pressures. This coincided with the dollar’s most recent decline.
After the Labor Department reported an annual growth rate of 7.7% in October, economists had anticipated that the CPI would rise by 7.3% in the year to November.
In a statement, the department stated, “This was the smallest 12-month increase since the period ending December 2021.”
In June, the CPI grew at an annual rate of 9.1%, which was its highest level in 40 years. It has returned a full 2% over the past five months since that peak, slowing every month.
In a post on the ForexLive forum, economist Adam Button referred to the 0.5% annual decline in October as “the previous report surprising to the downside.” This isn’t exactly as large of a shock however it’s in a similar bearing” in nudging the Fed to dial back on its rate climbs, said Button.
The Fed’s inflation target is just 2% per year. In a bid to control flooding costs, the national bank has added 375 premise focuses to since Spring through six rate climbs. Prior to that, the Fed slashed interest rates to nearly zero in 2020 following the global COVID-19 outbreak, bringing them down to just 25 basis points.
The Federal Reserve is now considering a 50-basis point increase for its December 14 rate decision, following four consecutive 75-basis-point hikes of jumbo rates from June to November.
What the next rate hike will look like in February 2023 is more important than that: On Tuesday, early indications from the money markets suggested a 25-basis point increase. If this is true, it will match the March increase that kicked off the Fed’s 2022 rate hike series.
