(Bloomberg) — Gold rose from its lowest level in more than two years, as the dollar eased back after hitting a fresh record.
The dollar’s advance stalled on Tuesday, providing relief for the non-interest bearing metal. While gold is seen as a traditional haven in times of economic distress, fears of a global recession stoked by central banks’ monetary tightening has instead triggered big gains in the greenback.
The fall in other major currencies including the pound and yen could continue weighing on commodities priced in the dollar. The markets for energy and raw materials have also taken a hit as key gauge Bloomberg Commodity Spot Index tumbled to the lowest since February.
“The move in the dollar is not over and that should keep the pressure on bullion,” said Ed Moya, senior market analyst at Oanda. “Gold is struggling in this environment as many investors are getting very tempted at two-year Treasuries.”
This week, the market may face fresh volatility from the release of US inflation data and public speaking engagements by Fed officials including Vice Chair Lael Brainard and New York Fed President John Williams.
Bullion is in a bear market after slumping 20% from the 2020 record. The metal’s price movements usually have a negative correlation with the dollar and interest rates, as it is priced in the US currency.
Spot gold climbed 0.4% to $1,628.69 an ounce at 8:06 a.m. in Singapore. The Bloomberg Dollar Spot Index declined 0.2%, following Monday’s 1% gain. Silver, platinum and palladium all rose.