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(Bloomberg) — Gold rose from its lowest level in more than two years, as the dollar slipped after hitting a fresh record.
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The dollar’s advance stalled on Tuesday, providing relief for bullion, which rose as much as 1.2%. While gold is seen as a traditional haven in times of economic distress, fears of a global recession stoked by central banks’ monetary tightening have instead triggered big gains in the greenback.
The decline 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 with the key Bloomberg Commodity Spot Index tumbling to the lowest since early in the year.
This week, the market may face fresh volatility from the release of US inflation data and public speaking engagements by Federal Reserve 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, driven by investors liquidating their positions in exchange-traded funds and futures markets. Holdings in the former are now near the lowest this year, after spiking following Russia’s invasion of Ukraine.
“Gold appears to have lost its role as a safe haven to the USD, which thanks to the Fed rate hikes is promising considerable returns again,” Commerzbank AG analysts including Barbara Lambrecht said in a note. “ETF investors are responding by jettisoning their gold holdings in grand style.”
Spot gold climbed 1.1% to $1,639.90 an ounce at 12:38 p.m. in London, after falling 1.3% on Monday. The Bloomberg Dollar Spot Index declined 0.4%, after rising to a record at the start of the week. Silver, platinum and palladium rose.
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Image and article originally from finance.yahoo.com. Read the original article here.