Dollar rebounds from two-week lows, why?
Dollar rose in European trade off two-week lows against a basket of major rivals on track for the first profit in three days.
The gains come amid positive developments in the US bonds market, bolstering the case for US dollar investments. .
The Index
The dollar index rose 0.3% on Tuesday to 104.26, with a session-low at 103.77, after closing down 0.2% yesterday, marking two-week lows at 103.67.
US Yields
US 10-year treasury yields rose 1.7% for the third straight session, heading for 11-year highs at 3.5%.
Higher yields underpin the dollar and hurt gold demand, as analysts now expect a solid 0.75% rate hike in July to control record inflation.
Consumer Sentiment
Now investors await data on US consumer sentiment later today, important for gauging the market's confidence.
Gold prices under pressure as US yields rebound
Gold prices declined in European trade for a second session under pressure from higher US yields, hurting demand on non-yielding assets.
Prices Today
Gold prices declined 0.2% on Tuesday to $1,821 an ounce, after losing 0.2% yesterday, the second loss in three days.
US Yields
US 10-year treasury yields rose 1.7% for the third straight session, heading for 11-year highs at 3.5%.
Higher yields underpin the dollar and hurt gold demand, as analysts now expect a solid 0.75% rate hike in July to control record inflation.
The G7
G7 countries are expected to ban gold imports from Russia on Sunday to tighten the noose on Moscow and cut off some of its finances.
Some analysts thought such a move would bolster gold prices but it's a mostly symbolic move since Russian assets are already banned from the west.
The SPDR
Gold holdings at the SPDR Gold Trust fell 4.64 tones yesterday, the fifth decline in a row, to a total of 1,056 tones, the lowest since May 19.
Euro hovers near three-week highs on European rate forecasts
Euro rose in European trade against the dollar for the third straight session on track to hit three-week highs amid increased demand on the common currency following bullish remarks by ECB officials, while the dollar gives up ground as risk appetite improves in the market.
Prices
EUR/USD rose 0.25% on Tuesday to 1.0606, with an intraday low at 1.0570, after rising 0.3% yesterday, the second profit in a row, marking three-week highs at 1.0615.
European Rates
Forecasts are strengthening for European rate hikes this year after a spate of bullish remarks by ECB officials.
Some ECB officials even hinted at a possible 0.5% rate hike at the July meeting, which would indeed surprise the market.
ECB President Christine Lagarde said she doesn't expect the euro zone economy to fall in recession.
The Dollar Index
The dollar index fell 0.1% on Tuesday for the third straight session, almost hitting two-week lows against a basket of major rivals.
Haven demand is falling, while US inflation is stabilizing, reducing estimates for Federal Reserve rate hikes in 2022.