Gold battles a strong greenback
29 April 2022
Friday 29 April 2022
In this week's market report:
- Gold demand up 34% in Q1
- 200 years of the gold-to-silver ratio
- Weakening AUD drives Aussie gold price higher
- Inside the office this week…
US dollar gold price [XAUUSD] Daily chart
Source: Trading View
(Click to enlarge)
(Click to enlarge)
Gold gets pushed down: Gold was pushed down last week to back below US$1,900. Overall, spot gold is down 3.21% to US$1,889.
Greenbacks and a hawkish Fed keep Au down: The US dollar remains strong, and the Federal Reserve Bank is expected to increase rates at next week’s Federal Open Markets Committee (FOMC).
- Fed Chair Jerome Powell has warned future increases could be as much as 50 basis points.
- St Louis Fed president James Bullard is pushing for 75-basis-point increases in future meetings, though he is up against internal pushback.
- The BoJ confirmed it would continue to guide 10-year Japanese government bond yields to near 0%.
- A USDJPY cross rate of 130 yen for 1 US dollar is an important psychological level.
With Reuters writing:
‘Measured against a basket of currencies, the dollar index had reached a five-year top of 103.28 and a further push above 103.82 would see it to levels not visited since late 2002.All precious metals were down this week: Persistent strength in the USD is putting pressure on the value of precious metals, with falls across the board. Silver has been driven down to a two-month low. As discussed here, if silver remains above US$21.50, the overall bullish trend remains intact.
‘The euro was pinned at US$1.0553, having hit a five-year low of US$1.0515 on Wednesday. The single currency has fallen 4.6% so far in April and is heading for its worst month since early 2015.’
- Silver has dropped 5.95% to US$23.17
- Platinum has fallen 6.85% to US$919
- Palladium is down 6.45% to US$2,255
Bears, the next FOMC influences gold’s direction: Gold remains above two-month lows. The May FOMC risks gold being pushed back down below US$1,850, with US$1,833 in play if Au stays below US$1,912.
Weakening AUD drives Aussie gold price higher: The Australian dollar has fallen 3.74% against the US dollar, with the Aussie now dollar at 70.94 US cents — a five-week low. This local currency weakness has caused the Australian gold price to rise 1.39% this week to AU$2,626.
Gold demand up 34% in Q1
US dollar rally didn’t stop gold demand: The World Gold Council’s (WGC) quarterly showed gold demand had risen even as the US dollar rallied 8% over the first three months of the year.
- Gold demand increased by 34% year-on-year to 1,234 tonnes
- The highest amount since Q4 2018
- Q1 demand was 19