The collapse of the price of the USD, which started at the end of the last month, has an impact on the price of gold, which has reached the highs at the level of 1297.00 USD per ounce. At the beginning of May the price of gold exceeded the level of 1300.00 USD; however, later the trend has changed and the price of gold has been declining for the third consecutive day. Prior to the data on the US labor market, which will be released on Friday, traders close short positions on the USD.
Currently, the USD is under pressure due to the fact that the US GDP growth was slower than expected in Q1. According to the US Commerce Department, GDP rose by o.5% per annum in Q1 against the forecast of 0.7% and the rise of 0.9% in the previous quarter. This was the lowest growth rate in two years.
High interest rates usually make the USD more attractive for investments and increase the price of storage.
However, judging by the price of futures for the Fed rate, possibility of the increase in the US interest rate in June is evaluated at 13%.
On Tuesday the USD reversed upward after reaching monthly lows against the Euro and Yen. Investors take profit on short positions prior to the release of NFPR on Friday.
The rise in the USD was triggered by the decline in oil prices since the beginning of the month and yesterday’s decision of ARB to lower interest rate (the rate has been decreased for the first time since June 2015 to the level of 1.75%).
USD index WSJ, which tracks the price of the American currency against the basket of the major 16 currencies, rose by 0.8% to 8529 at the end of yesterday’s trading session.
Today’s news will include US data, which will be released from 14:15 to 16:30 (GMT 2). Volatility at this period is expected to increase. If the US macro-economic data turns out to be positive, the USD will continue to grow in the financial market, while the price of gold will drop.