The world’s supposedly preferred “safe-haven” is not being treated as such as the global economy shudders from the possibility of more inflationary and rate hike pain. Its nemesis instead wears the crown, sitting atop the current market upheaval.
Gold hit new 7-month lows Tuesday, with its spot price hanging on to the ropes of key $1,800 support.
Meanwhile, ‘King Dollar’, as the US currency is called these days, neared a 11-month high on the Dollar Index, or DXY, which measures the greenback against six competing currencies — namely the euro, yen, Canadian dollar, Swedish krona, British pound, and the Swiss franc.
Investors continue their rush towards the dollar at the expense of gold, with the greenback taking on the mantle of super stability against the currencies of challenged economies — giving the sort of assurance one would expect of gold.
Macro strategist James Stanley said the theme of dollar weakness which prevailed for much of the second quarter was probably tested to the brink when bears pushed the DXY below key 100 level support in July.
In a commentary that ran on forex.com, he said:
“That move could not last and what started as a pullback has since turned into a historically clean run of strength in the DXY with now 11 consecutive weekly gains for the first time since September of 2014.
We can see the July breakdown met with failure, which then ran into strength in August and September.”
Commodities chartist and Investing.com collaborator Sunil Kumar Dixit concurred, saying DXY seemed on an “unstoppable rally”, adding:
“We’ve entered the 12th week of a consistent bullish advance, with DXY finally testing the 107.18 critical zone, which is the 50% level of Fibonacci retracement from the previous major
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