Gold Price Gains Ground as Greenback Sees Profit Taking

As the dollar fell after a new record, gold rose from its lowest level in more than two years. The dollar stabilizes, allowing gold to rise from two-year lows.

On Tuesday, the dollar's gains stalled, which helped the low-yield metal. As gold has traditionally been considered a safe haven during tough economic times, fears of a global recession due to central bank tightening have propelled the dollar higher.

Dollar-denominated commodities could continue to be pressured by the decline of other major currencies, including the pound and yen. The dollar index fell to its lowest since February, affecting energy and commodity markets.

Commtrendz Risk Management Services director Gnanasekar Thiagarajan said a strong dollar could further pressure precious metals. He added that the bullion price is expected to hit $1,550 an ounce in the coming weeks as further rate hikes to curb inflation will erode gold's safe haven status.

US inflation data and public comments from Federal Reserve officials, including Vice Chair Lael Brainard and New York Fed Chair John Williams, could cause the market to experience renewed volatility this week.

The price of gold has fallen 20% from its record high set in 2020. Because metal prices are quoted in US dollars, they tend to negatively correlate with the dollar and interest rates. 

The 4-hour chart shows a slight recovery from the multi-month lows. However, the volume bars keep declining with the minor up wave. It indicates that the corrective upside lacks strength and may be prone to another fall towards the $1,600 level. 

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