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Weaker USD Allows Gold to Gain Ground




  • Gold prices are expected to rise for the second week in a row.
  • Key Issues: Weaker Dollar and Inflation Fears
  • Other Precious Metals are also Increasing in Value

In commodities news, gold prices begin Friday hoping for a good week and a second straight price rise after a period of weakness for the precious metal. This comes as the Dollar has weakened somewhat this week, giving up a fairly strong position that it had built up in previous weeks. Gold has regained some traction as a result of the weakening, as has the return of some inflation concerns. On that point, the publication of PMIs and Fed speeches will be closely monitored. Other precious metals have also benefited from the uptick in sentiment this week.

The gold market is regaining strength.

With the US Dollar gaining up speed against a background of negative sentiment throughout the market, gold has been in a bit of a slump. With the exception of the Dollar, the currency market for most currencies was down, and the US Dollar index, which soared over 94 at times, witnessed a return to strength. 

This has changed this week, as the market attitude has flipped again as government rates have fallen and Wall Street has had a generally good results season. This resulted in a decline in the US dollar, which was accompanied by a return to form in gold demand. The precious gold has climbed in early trade to lie just below a crucial psychological level of $1800, which it will be attempting to break through today.

Switch Your Focus on PMI Numbers

The Markit Preliminary PMI figures from Europe and the United States are expected to be published today. For individuals that trade gold and other commodities, as well as currency, this is the next area of emphasis. Such figures are known to affect the strength of the dollar, therefore the effect on commodities will almost definitely be seen. Inflationary pressures are anticipated, thus they’ve probably already been factored in. 

Today’s agenda will also include remarks by the Federal Reserve and its Chairman, Jerome Powell. Analysts will be watching for any clues he may provide about the Fed’s monetary policy moves in the near future, as is customary. 

Precious Metals have had a good week.

This week’s winners haven’t been limited to gold. While it has risen, so have the prices of the other precious metals. Silver has reclaimed the $24 level this week, and with a 0.2 percent increase as we approach Friday, it seems to be on track for a fifth consecutive week of gains.

At the same time, Platinum and Palladium are aiming to cap off a successful week for both metals. Platinum has gained 0.5 percent this week and is now trading over $1050 per ounce, while Palladium, the most costly of the four metals, has gained another 1% this week and is currently trading just below $2040.

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