The US dollar recovered some of the ground recently lost to the euro during early Wednesday trading. The greenback’s gains resulted from surprisingly strong American manufacturing data and comments by an ECB board member, who expressed concerns over the strength of the currency and the impact it is having on European stocks. A strong euro, trading above 1.20 to the dollar, has traditionally been seen as detrimental to exports and therefore to the European stock market, so it is natural that there is strong resistance around this level. However, the current outlook still entails dollar weakness and today’s dynamic should be no more than a short-term correction.
The US dollar is recovering and consequently gold is losing ground. Bullion’s decline is proportional to the recovery of the greenback, confirming that the current movement is mostly related to what is happening on the currency markets. In other words, the main trend for gold remains positive and a clear surpass of $1,990 and then $2,005 would open space for further rallies. Despite stocks looking strong currently, with US indices at a new historical high, investors are increasing their gold investment as a strategic and defensive asset in case there are new market corrections. Moreover, the strong dovish monetary policy of central banks is another element which is supporting the gold price rally.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.