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Gold is back to the minimums amid stronger USD dollar

Jul 27 2018, 01:45 PM (+06) | Fortfs.com

USD dollar growth led to a reversal of gold price and now the precious metal is under pressure declining once again. On Thursday gold market lost 0.5%, the same value USD dollar gained.

One of the factors that likely triggered the gold upward move besides technical ones was the ECB's decision on monetary policy, which brought demand for the American currency through EUR / USD pair.

The main European financial regulator left the interest rate unchanged and again stressed that interest rates will remain unchanged until the end of the summer of 2019, thus once again pointing out serious discrepancies in the monetary policy of the ECB and the Fed.

We should also note the influence of geopolitical factors on gold. Yesterday we noted that the precious metal again began to respond to reports related to the problems of world trade, regaining the status of the main defensive asset. These factors are also now playing against the yellow metal, as experts positively assess the outcome of the negotiations between Juncker and Trump. This somewhat reduced concerns about the possible escalation of the trade confrontation and adversely affected the demand for safe assets.

Therefore, now the fundamental background around gold is again changing to negative, primarily due to the stronger USD dollar, which today can accelerate after the publication of important data on GDP estimates for the 2nd quarter. Experts are very positive and expect to see the index at 4.1%, after 2.0% in the previous period. Strong data may cause a strong impulse for USD of the dollar, which will be an extremely negative factor for gold.

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