Islam Saeed Books

Wednesday, April 19, 2023 02:00 AM

The dollar saw support earlier in the week as manufacturing activity data from New York State increased for the first time in five months, with April improving confidence among U.S. homebuilders for the fourth consecutive month. U.S. Treasury yields edged higher during Monday’s session, with the 10-year yield rising 2% to hit a two-week high of 3.608%, and the two-year yield higher. Sensitive to interest rate changes, it rose 1.5% to hit a 3-week high of 4.2048%.

Higher yields on government bonds supported the dollar’s gains, but in light of the volatility that dominated the markets during the period, the dollar’s levels declined today in the absence of key data from the markets.

Global markets, on the other hand, follow reports from members of the Federal Reserve this week, before starting a blackout period starting on April 22, ahead of the Federal Reserve’s meeting on May 3.

Looking at gold’s short- and medium-term prospects relative to the most popular US stock index, the S&P 500, we see that gold has consistently outperformed the index, even during the index’s last 5-week rally. In markets.

The natural movement when the S&P 500 index rebounds is to see gold pull back as investments move from the safe haven represented by gold to the risk represented by the stock index, but the stability of gold and the recovery of the index in recent times reflects continued uncertainty in the markets and investors even at a time of risk appetite in US equities. It reflects a desire to remain stunned, and it happened after the last banking crisis last March.

All this points to gold’s consolidation and willingness to record new highs, but this may be preceded by an initial correction and volatility, and awaits the Federal Reserve’s signal at its next meeting on the future of monetary policy.