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Gold goes down on strengthening greenback
On Tuesday, gold headed south to a year minimum, suppressed by a soar in the US dollar because Fed Chair Jay Powell told that gradual rate lifts would continue.
August delivery gold futures headed south by 0.94% on the Comex exchange being worth $1,228.00 a troy ounce, having soared to $1,245.10 earlier.
On Tuesday, in his annual testimony to Congress Tuesday, Fed Chair told that for the US key financial institution the best strategy would be to proceed with lifting interest rates due to the fact that the American job market has managed to strengthen and inflation has successfully met the Fed's 2% objective.
It undoubtedly reaffirmed investor expectations that the US major bank is going to have interest rates lifted twice more in 2018, helping market participants to pile into the evergreen buck, diminishing demand for the number one precious commodity.
Estimating the greenback’s value versus a group of six main currencies, the USD index tacked on by 0.45%, ending up with a reading of 94.69.
Gold has always reacted to any changes in the value of in both American bond revenues as well as the evergreen buck. A soaring greenback makes gold less affordable for those investors who hold foreign currency. On the contrary, a leap in American rates raises the opportunity cost of keeping gold because it pays no interest.
In addition to this, a stronger evergreen buck also demonstrated that other metals bounced off steeply as aluminum gave up revenues to stick with session minimums, platinum futures sank to a two-week minimum.
Besides this, copper went down by 0.56% being worth $2.75, zinc rallied by 0.96% reaching 2,507.50.
Aluminium slumped by 1.25% trading at 2,033.00, Nickel futures went down 0.868% showing 13,545.00.
As for silver futures, they slumped by 1.25% reaching $15.61 a troy ounce. Platinum futures dipped by 0.57% trading at $821.70.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
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.