Gold trading alert: three major central banks want to raise interest rates, gold prices tumbling, focus on U.S. CPI data

By    14 Jul,2022

Wednesday (July 13) early Asian market, spot gold shock slightly down, currently trading near $ 1724, the prospect of Fed rate hikes and recession safe-haven buying, help the dollar to hold near the high of nearly 20 years, which keeps gold prices under pressure, this trading day will also usher in the Bank of Korea interest rate resolution, the New Zealand Federal Reserve interest rate resolution, the Bank of Canada interest rate resolution, the market is widely expected to raise interest rates by 50 The market is widely expected to raise interest rates by 50 basis points, which is expected to further increase the opportunity cost of holding gold, to the detriment of gold prices.


Daniel Pavilonis, senior market strategist at RJO Futures, said, "Investors are buying a lot of dollars, and expectations of higher interest rates at a time when inflation is more persistent, putting pressure on gold."

The dollar index hovers near a 20-year high, reinforcing its position as the safe-haven asset of choice amid the growing risk of recession, while making gold more expensive for buyers holding other currencies.

A slew of U.S. data also due out this week, including consumer prices, retail sales and factory output, will provide clues about how far inflation has surged ahead of the Federal Reserve's policy meeting next week. Investors will also need to pay attention to the Fed's Brown Book on economic conditions, which will be released on Wednesday.

Han Tan, chief market analyst at Exinity, said, "A higher-than-expected headline consumer price index (CPI) on Wednesday should pave the way for the Fed to raise rates by another 75 basis points later this month; a scenario widely seen as bad for gold."