Summary: The US Dollar (USD) struggles to capitalize on its recent recovery as it meets resistance and faces some selling pressure. This is partly due to a slight decline in US Treasury bond yields. Additionally, concerns about the potential ripple effects from the aborted mutiny in Russia have increased demand for safe-haven assets like Gold. Russian mercenaries briefly seized the southern city of Rostov before reaching a deal that ensured their safety and the exile of their leader.
In contrast, central banks in the UK (Bank of England), Switzerland (Swiss National Bank), and Norway (Norges Bank) have recently raised their benchmark interest rates. The Federal Reserve (Fed) also signaled the possibility of further rate hikes, potentially up to 50 basis points by year-end, to combat persistent inflation. Fed Chair Jerome Powell reiterated this stance during his two-day congressional testimony, emphasizing a cautious approach to rate increases. These expectations of higher interest rates should limit USD losses and act as a headwind for the price of Gold.
Conclusion: Gold is expected to increase in value.
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