USD strength weighs on precious metals

Summary:

  • USD rising against all but 1 peer despite Trump comments

  • Strength in the buck weighing on precious metals

  • Gold falls further; Platinum swoons

 

It’s been a strong start to the week for the US dollar, with the buck rising against all but 1 other currency today despite an attempted verbal intervention from US president Trump over the weekend. Speaking in Maryland, Trump repeated his criticism of Fed policy and bemoaned the strong US dollar by describing chair Powell as a "gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, and we have a gentleman that likes a very strong US dollar".

Only the Brazilian Real is outperforming the US dollar today, with the Buck rising despite more calls for a weaker currency from US president Trump over the weekend. Source: xStation

Trump is renowned for trying to interfere in the markets, with last Monday seeing an immediate impact on the Oil price after he took to Twitter to pressure OPEC but these latest remarks are unlikely to have any impact in reality. If his comments had the ability to impact Powell and fellow rate-setters views then this would likely have already become readily apparent and it remains a long shot that Trump would actually seek to replace Fed members purely to create a more dovish board. The Fed are already seen as not resuming rate hikes anytime soon according to market pricing and therefore there is less scope for a dovish move.

 

The persistent strength of the buck is making its presence known elsewhere too, with precious metals continuing on from the slide which began last week. Gold has now fallen around $60 in less than a fortnight as the markets have reversed the gains seen for much of February due to both a strong USD and also improved risk sentiment. You have to go back to the end of January to find lower prices for Gold and the recent trade represents something of a swoon as stops appear to have been run to the downside.

Gold has come under some pretty heavy selling pressure of late with a combination of risk-on sentiment and a persistently strong USD weighing on price. The market is now approaching prior support around 1277. Source: xStation

Platinum has dropped sharply today with the market catching up with Gold in coming back off the recent highs. Price has declined in excess of 2% after once more respecting prior resistance around 874. Source: xStation

 

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