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MTrading Team • 2023-03-03

Precious Metal Prices Are Still Driven by the Dollar

Precious Metal Prices Are Still Driven by the Dollar

The USD is still the main driving force for the pricing of precious metals including gold. All market participants are extremely focused on the upcoming monetary policy events that can bring specific changes implemented by the Federal Reserve.

Bringing inflation down is still a challenge for the FED. What’s more, inflation turns out to be the main driver of changing prices in different sectors across the globe and the financial sector in particular. Additionally, the USD strength is another key factor gold and silver traders need to take into account. This is mainly due to the fact that both metals are still priced in the US Dollar.

Dollar Takes Gold Prices Down

The gold and silver price decline was the result of the dollar’s strength. April’s gold futures are down by 0.18% ($3.30). As for silver futures, it declined by 0.52%. It all resulted from the strengthening dollar that gained 0.513 points (0.49%).

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Initially, metal market participants bid gold and silver fractionally higher. However, the dollar's strength made the tables turn. Pricing for both metals declined.

Spot Gold Loses Value

Today, spot gold and spot silver lost 9 and 7 cents in value respectively. Totally, a growing dollar made the yellow metal lose $9.90.

Investors expect the upcoming jobs report to reveal a tight labor market. The report will be released on March 10. The forecasts are quite pessimistic, as tighter markets will force employers to increase wages and attract employees that meet companies’ professional requirements.

It will create additional pressure that will inevitably boost inflation. In the end, we might see the Fed accelerating rate hikes. In addition, market participants expect the CPI inflation index to be released 4 days after the job report. Both will have a crucial impact on decisions made by the Federal Reserve, as well as dollar strength, and gold and silver prices.

May the trading luck be with you!