The oil price looks optimistic. What are the reasons?
Gold slumps due to strengthening greenback
On Wednesday, gold prices stuck to a minimum for two weeks in the face of a soaring evergreen buck and also the revenue of American Treasury bonds.
On the Comex exchange June delivery gold futures dived by 0.54% ending up with $1325.9 per troy ounce. It’s a bit higher than the minimum recorded on Monday for two weeks, which accounted for $1323.80.
The US dollar index, normally evaluating the purchasing potential of the American currency versus the pack of six leading peers, surged 0.3% showing a peak for seven weeks of about 90.82.
The evergreen buck rallied due to the growth in revenues in US government bonds as well as the prospect of accelerating the Fed's interest rate lift in 2018.
A higher interest rate normally backs the greenback because it attracts the attention of profit-seeking investors. The revenue of 10-year US government bonds surpassed 3% on Tuesday for the first time since 2014. It drops a hint that investors are confident in in the good future of the US economy.
Published on Tuesday, data uncovered that the volume of construction of new homes as well as consumer confidence in America turned to be better than analysts' estimates, which strengthened the forecasts of a stable surge of the American economy in the nearer months.
An ascending US currency makes the key precious metal less accessible to keepers of other currencies. At the same time, a leap in the yield of American government bonds drove investors’ fears about the accelerating rate of the Fed's interest rate leap. Increasing the interest rate normally provokes a dive in gold prices.
As for other precious commodities, silver futures decreased by 0.8% on the Comex exchange being worth $16.57 per troy ounce. As for platinum futures they dipped 0.97% reaching $925.90.
Additionally, copper futures declined 0.35% coming up with $3.13 per pound.
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.