Gold is recovering quite a bit. The euro faces the test of fire

Gold is still close to six-month lows, pressured by the rising dollar, which currently acts as a safe haven, at a time when investors fear a recession and are witnessing a tightening in the monetary policy of the US Federal Reserve.

The yellow metal rose 0.21% to $1,768.51 an ounce, but remained very close to its lows on Dec 15 last year ($1,764.07). In turn, the Bloomberg Dollar Index – which compares the strength of the greenback against 10 competing currencies – reached its highest level in March 2020, and is trading on the waterline (0.03%) at 106.48.

Gold appears to be ranked second against the dollar, Gavin Wendt told Bloomberg. “Gold has done well this year, but the dollar’s recent gains have had a negative impact on dollar-priced gold,” explains MineLife’s chief analyst.

This Wednesday, investors will be on the lookout for the release of the minutes of the Federal Reserve’s latest meeting, as the market looks for clues about the possibility of the central bank raising its key interest rate between 50 and 75 basis points the next day. The meeting is scheduled for July 26 and 27.

In the eurozone, the single currency is on the waterline against the dollar (0.07%) at $1.026, yet it is still at a 20-year low against the greenback. This week, the EUR/USD pair is facing a severe trial as analysts believe it is only a matter of time before the euro is on par with the dollar, with some even conceding that the single currency could be below the dollar.

“It is only a matter of time before the euro enters parity with the dollar,” Bloomberg quoted Neil Jones, head of foreign exchange at Mizuho, ​​as saying. Mario Martins, analyst at ActivTrades, went further and, in comments to Negócios, admitted that “It is entirely possible that the euro is worth less than the dollar. It is not an absolute case because it has not happened yet, but it is almost inevitable in this time. Very likely this week.”