Gold prices fell a bit after hitting an all-time high around $3,400. During the Asian session on Tuesday, they set a new close to four-week high at $3,392. This latest move comes as part of a more overarching look into the market dynamics influencing both precious metals and FX rates.
Gold’s high mark for the trading session was its highest in recent weeks, suggesting cautious optimism from investors. The cost has come down a bit from that. That means while we should prepare for a short-term slowdown, a big downturn is not in the cards at this moment. Analysts remain optimistic about gold’s performance.
“Gold price eases from multi-week top near $3,400; bullish bias remains.” – FXStreet
The setback in gold values corresponded with action in the currency markets. The USD/JPY pair rebounded sharply from a one-week low, now having re-taken the psychologically-important 143.00 figure in Tuesday’s session. The U.S. dollar has gotten a slight boost from all of this. This rebound comes after its recent drop to six-week lows against all the major competitors.
At present, the Japanese yen is facing considerable downward pressure. Still, ongoing talk about the need for federal bonds is stoking fears of fiscal policy. This is why investors are now focused on the next releases of U.S. economic data. Or they are like children on Christmas morning, waiting for more detailed communications from Federal Reserve officials, adventures of portfolio reallocation and fate of state bonds.
Even more telling of the recovery from earlier weekly lows was the performance of USD/JPY as the Asian trading session dawned. The dollar’s strength is providing a unique one-time market distortion. At the same time, the weakness of the yen underscores just how central this dynamic has been.