Gold Prices Soar as US Dollar Weakens
(Source: FXStreet)
Gold prices surged on Monday, July 18, 2023, as the US dollar weakened against major currencies. The precious metal reached a high of $1,820 per troy ounce, its strongest level since June 2022.
The sell-off in the US dollar was driven by growing market expectations of a less aggressive interest rate hike path by the Federal Reserve. Investors are pricing in a rate hike of only 50 basis points at the Fed’s upcoming meeting, down from the 75 basis point increase previously anticipated.
The weaker dollar makes gold more attractive to investors seeking a hedge against inflation and currency volatility. As the dollar loses value, the purchasing power of gold increases, making it more desirable for international buyers.
“Gold is benefiting from the weaker dollar, which is making it more affordable for international buyers,” said Michael Hewson, chief market analyst at CMC Markets UK. “The metal is also seen as a safe haven asset in times of uncertainty, and the ongoing geopolitical tensions and economic headwinds are supporting its price.”
Market participants are closely monitoring the Ukraine-Russia conflict, rising inflation, and the trajectory of interest rates for potential catalysts that could drive gold prices higher. Analysts expect gold to remain supported in the near term, with a potential for further gains if the dollar continues to weaken.
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