On Thursday, gold prices jumped above $3,380. The market was driving higher in reaction to disappointing US economic data, following through on the strengthening seen from yesterday. The yellow metal ended the day in solidly positive territory on Wednesday. Despite this setback, it continued its bullish run, pressuring the $3,400 barrier. The primary driver of the rally has been the dramatic fall in US Treasury bond yields. This drop came on the heels of May’s inflation data release, which did indeed show softer-than-expected results.
In particular, we would argue that the weakening of the US dollar was pivotal in driving gold’s bullish trajectory. With USD weakness continuing to reign, it staved off any potential bearishness and allowed XAU/USD to continue its ascent. This trend had a huge effect on other currency pairs. Amazingly, GBP/USD had jumped over the 1.3600 level following its recovery from an initial dip. The dollar’s unusually acute weakness has been the most prevailing factor affecting market sentiment. In sum, this was a very bullish day for GBP/USD on Thursday.
For gold and currency markets all this is a sea change. At the same time, US Jobless Claims data illustrates that pain continues in the labor market. This deeply disappointing report, along with weak producer inflation data, added even more fuel to a growing US dollar downward spiral. Analysts pointed out that data as weak as this is very damaging to the currency, especially as it drags down investor confidence.
At the same time, EUR/USD pair resumed its multi-year, topping at above 1.1600 after the release of US economic data. Indeed, this was the euro’s highest level against the dollar since November 2021. The EUR/USD pair extended its daily advance, a clear reflection of the market’s strong preference for European currencies. This change came amidst major uncertainties in the US economy.
Cardano (ADA) has shown weakness in the altcoin bear market. It appears to have turned around after touching an upper trendline in a triangle formation. At press time on Thursday, the cryptocurrency had moved down by more than 1%. This month, Cardano whales haven’t been sleeping. They can brag about having now purchased a mind-boggling 310 million ADA tokens! Bringing this one home, you know that whatever’s happening with digital asset prices, there is still strong interest in the space.
The relationship between these markets has been carefully tracked by economists and investors. Like us, they are all eager to see how these trends will play out given approaching economic reports and geopolitical events.
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