Gold: Safe-haven rally fades with rate repricing – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s Thu Lan Nguyen notes that Gold briefly surged above USD 5,400 per troy ounce yesterday, outperforming the Dollar and US Treasuries, before retreating back to Friday’s level. She links the pullback to markets focusing on inflation risks from higher Oil, reducing expectations for rate cuts, and stresses that central bank responses will be crucial for Gold’s next move.

Inflation and central banks key for gold

"The gold price rose to just over USD 5,400 per troy ounce yesterday, outperforming other safe havens such as the USD (against the EUR) and US government bonds."

"However, the precious metal fell back again yesterday and early this morning. The price is now back at Friday's level."

"This is likely due to the market now placing greater weight on the inflationary risks resulting from the war in the Middle East and therefore scaling back its expectations for interest rate cuts."

"This also explains why the US dollar continues to gain ground."

"How gold will develop in the future therefore depends very much on how central banks weigh up the risks. If they signal that they want to wait and see how the inflationary effect of higher oil prices plays out, this would be positive for gold."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD hangs near two-month low, below 0.7000 ahead of Australian CPI report

AUD/USD consolidates below 0.7000 during the Asian session on Wednesday, trading near a two-month low as traders look to the Australian CPI report for more cues on the RBA's policy path. Meanwhile, the US Dollar preserves its bullish undertone amid rising Fed rate-hike bets, which, along with oil-driven inflation fears, push US bond yields to multi-year highs. Moreover, the US-Iran standoff underpins the safe-haven buck and acts as a headwind for the currency pair.

USD/JPY trades below 157.50 as Japan's weak data and bullish USD lend support

USD/JPY extends its consolidative price move during the Asian session on Wednesday, trading below mid-157.00s. Hawkish BoJ expectations, along with intervention risks, underpin the Japanese Yen, though dismal domestic data cap gains. Meanwhile, rising Fed rate hike bets and oil-driven inflation fears push US bond yields to fresh multi-year highs. Moreover, the US-Iran standoff supports a bullish US Dollar and acts as a tailwind for the currency pair.

Gold consolidates below $4,200 as bullish USD and Fed hike bets offset softer bond yields

Gold struggles to capitalize on the previous day's recovery from an eight-week low, consolidating below $4,200 during the Asian session on Wednesday. The overnight slide in oil prices eased the US Treasury bond rout, supporting the bullion. However, Fed rate-hike bets and inflationary concerns keep bond yields near multi-year highs. Moreover, geopolitical uncertainties underpin the safe-haven US Dollar, which, in turn, caps the commodity.

Ethereum sees profit-taking near $2,700 ahead of key US economic data

Ethereum (ETH) has shown signs of profit-taking near $2,700 over the past few days, with rising exchange deposits and a slowdown in exchange-traded fund (ETF) inflows ahead of US inflation and labor market data releases. The top altcoin's Exchange Reserves, which track the total amount of a crypto asset held across exchange wallets, have increased by roughly 125K ETH since Friday.

Silver is more volatile than Gold ahead of PCE and NFP. This chart shows the positioning gap

The market’s attention is focused on American data this week, but there’s something only those with a trained eye may be looking at: Gold and Silver positioning gap. Financial markets are moving on fears, mostly related to persistently high energy prices driven by the Middle East war. Sure, the US Dollar (USD) is strong, but at what cost?