Gold Extends Decline in Asia as Dollar Surges to Record High
Gold steadied in Asia after plunging to the lowest since April 2020 on Friday, part of a broad financial market sell-off spurred by rapid rate hikes in major economies.
(Bloomberg) -- Gold fell toward the lowest since April 2020 on a surge in the dollar, spurred by recession fears following rapid rate hikes in major economies.
Bullion is under pressure as the US dollar soared to a fresh all-time high on Monday. The metal closed last week down 1.9% amid a retreat in everything from commodities to stocks after the Federal Reserve’s tightening drove the greenback higher.
Despite increasing signs of deterioration in the global economy that’s stoking recession fears, the traditional haven has slumped over the past month in the face of the greenback’s relentless gains. Bullion has entered a bear market, trading at a level 20% below its record high in 2020.
Money managers last week became the most bearish on gold in almost four years as central banks around the world hiked rates in an effort to contain soaring prices. The non-interest bearing metal, which is priced in the US currency, usually has a negative correlation with the dollar and rates.
In the coming 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.
Spot gold declined 0.2% to $1,640.56 an ounce at 9:13 a.m. in Singapore. The Bloomberg Dollar Spot Index surged 0.6% after gaining 2.4% last week. Silver fell, while platinum and palladium rose.
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