Dollar extends recovery amid recession warnings
Dollar rose in European trade against a basket of major rivals for the third straight session off six-month lows on short-covering.
Dollar is also boosted by haven demand amid spreading warnings about US recession next week due to inflationary pressures, hurting risk appetite.
The Index
The dollar index rose 0.2% to 105.82, with a session-low at 105.45, after closing up 0.3% yesterday, the second profit in a row, away from six-month lows at 104.11.
Recession
CEOs of JPMorgan, Bank of America, and Goldman Sachs warned that inflation will threaten consumer demand, and that banks are preparing for deteriorating conditions in 2023.
US recession would no doubt force the Fed to slow down its pace of policy tightening even further, in turn underpinning gold futures.
Fed Rates
After latest strong US services data, markets now put a 25% chance for the Fed to hike rates by 75 basis points, and a 75% chance for a hike by 50 basis points.
Gold gains ground as US yields decline
Gold prices rose in European trade for the second session as US treasury yields declined amid prospects of a reduced rate hike by the Fed next week.
Gold is also boosted by increased haven demand amid concerns about US economic recession next year.
Gold Prices Today
Gold prices rose 0.3% to $1,775 an ounce, after rising over 0.1% yesterday, resuming gains after a tumble from five-month highs at $1,810.
US Yields
US 10-year treasury yields fell 0.7% today for another session, in turn underpinning non-yielding assets like gold.
The decline comes as most analysts now expect the Federal Reserve to only raise interest rates by 50 basis points in December.
Recession
CEOs of JPMorgan, Bank of America, and Goldman Sachs warned that inflation will threaten consumer demand, and that banks are preparing for deteriorating conditions in 2023.
US recession would no doubt force the Fed to slow down its pace of policy tightening even further, in turn underpinning gold futures.
The SPDR
Gold holdings at the SPDR Gold Trust rose 2.6 tones yesterday, the first increase since November 25, to a total of 906 tones away from 903 tones, which was a January 2020 low.
Euro extends losses after ECB bearish remarks
Euro fell in European trade against a basket of major rivals, extending losses for the third straight session against dollar away from six-month highs on profit-taking, following somewhat bearish remarks by ECB officials, which cut chances of a 0.75% rate hike.
Dollar continues to recoup on haven demand amid mounting concerns about US recession in 2023 following warnings from several major Wall Street bankers.
EUR/USD fell 0.2% to 1.0443, after closing down 0.25% yesterday, the second loss in a row on profit-taking off six-month highs at 1.0595.
European Rates
ECB officials noted today that inflation and interest rates could be near peak values, ahead of the ECB official meeting next week.
Such statements cut chances of a European rate hike of 75 basis points this month, and boosted chances of a 0.5% rate hike only.
The Dollar
The dollar index rose over 0.2% today for the third straight session against a basket of major rivals off six-month lows.
Such recovery come amid haven demand after several Wall Street bankers warned from recession risks next year.
CEOs of JPMorgan, Bank of America, and Goldman Sachs warned that inflation will threaten consumer demand, and that banks are preparing for deteriorating conditions in 2023.
Wall Street declines amid uncertainty about interest rates
US stock indices declined on Tuesday amid uncertainty about the Federal Reserve's monetary policies.
It comes after US payrolls data showed increased growth in the labor market, which feeds inflation.
Such data sparked questions about whether the Fed will continue the current brisk pace of policy tightening.
Dow Jones fell 0.2%, or 72 points to 33,875 as of 15:00 GMT, while S&P 500 fell 0.6%, or 24 points to 3,975, as NASDAQ fell 1.1% to 121 points to 11,118.