Gold prices witnessed big swings this week, prompting new sellers around the $3,385 area. Tuesday’s high price was the most expensive that precious metal has been in several weeks. As is often the case with Monday gains, it soon lost all of those minor advances from the previous day. Gold’s recent price action is a stark reminder of the hurdles this critical asset is still up against, even in the face of modest US Dollar strength.
As of Thursday morning, GBP/USD had turned back around towards the 1.3550 area in early European dealings. The currency pair has been weighed down by a return of USD bullishness. What’s behind the response Traders are responding to mixed economic signals that are a reflection of larger market dynamics. Hope for new trade agreements between the US and Canada, as well as with the EU and the US, have added a tailwind to the Greenback.
Here’s why the Japanese Yen is still one of the weakest currencies in today’s market. Its upside seems overblown thanks to increasing speculation over BoJ rate hike prospects. As a result, the USD/JPY pair continues to hold gains above the 143.00 level thanks, in part, to a slight rise in the US Dollar supported.
Not surprisingly, market analysts’ continued predictions of gold prices’ demise were overstated at best. The bullish potential for the metal appears intact. Traders low-ball bidding on the increasing risk appetite for the US Dollar. They were re-positioning themselves ahead of Friday’s highly anticipated release of Non-Farm Payroll (NFP) data.
“Gold price remains depressed amid modest USD strength; bullish potential seems intact” – www.fxstreet.com/markets/commodities/metals/gold
The interaction between currency fluctuations and commodity prices is a stark reminder of the complicated economic relationship at play. As traders continue to process these recent developments, they are looking for any signs that could help shape their trading strategy in the weeks and months ahead.
“GBP/USD reverses to near 1.3550 as US Dollar finds fresh demand” – www.fxstreet.com/currencies/gbpusd
Perhaps more importantly, economic sentiment has been driven by anticipation of employment data that carry the heaviest prospective influence over ultra-accommodative monetary policy going forward. The market is extremely focused on the upcoming NFP report. Participants are keenly aware that these numbers have spawn market-moving potential with both currency and commodity markets.
“Japanese Yen remains depressed; upside seems cushioned amid rising BoJ rate hike bets” – editorial.fxsstatic.com