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Gold ascends due to diving US dollar
On Thursday, the leading precious commodity managed to leap against in the face of the depreciation of the evergreen buck. Fears about trade between the United States and China also increased the demand for the number one precious commodity.
June delivery gold futures tacked on by 0.6% on the Comex exchange being worth $1297.00 per troy ounce.
The greenback slumped after the record of the last meeting of the Fed indicated a cautious attitude of officials to lift the interest rate before the end of 2018. The protocol uncovered on Wednesday indicated that officials of the Federal Reserve are trying for some time to keep inflation above the target level of 2%. This suggests that the Fed isn’t going to rush to tighten monetary policy.
The US dollar index, which evaluates the purchasing power of the American currency versus six main currencies, inched down 0.28% coming up with a reading of 93.65.
Assets, traded in the US dollar, such as gold, for instance, are sensitive to any changes in the greenback’s exchange rate. So, a depreciation of the evergreen buck makes the yellow metal cheaper for those investors who hold other currencies, and it raises the demand for gold.
The escalation of tension in trade relations between the United States and China also led to a soar in demand for defensive assets. On Wednesday, US President Donald Trump made rather a dismal outlook on bilateral talks, calling for a new format of trade between countries and also suggesting that current arrangements would be very difficult to implement in practice.
Besides this, the attention of investors will be focused on the report on the number of initial applications for unemployment benefits as well as the report on the sales of houses in the secondary housing market in April.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.