Resilient US Economy Boosts Treasury Yields and Dollar
The strong performance of the macroeconomy in the United States resulted in an increase in Treasury yields at all maturities. The two-year note experienced a significant surge of over 15 basis points, nearly reaching 4.9%, the highest level since March 9.
As a consequence, the rise in interest rates bolstered the U.S. dollar against currencies with lower yields. This caused the DXY index to recover from its losses during the previous trading session and enter positive territory. The strengthening dollar initially created an unfavorable environment for precious metals.
The impressive resilience of the U.S. economy is expected to provide justification for the Federal Open Market Committee (FOMC) to raise interest rates again in the coming months, aligning with its stated plans. Although the Fed temporarily halted its rate hikes in June, it indicated that the process was not yet complete and projected an additional tightening of 50 basis points by the end of the year.
Initially, the markets were doubtful of the Fed's hawkish approach due to concerns about an impending recession. However, new data has significantly weakened this assumption. Not only is the economy not experiencing a downturn, but it also appears to be stabilizing and gradually improving.
Given this situation, it is likely that there will be a 0.25% rate hike in July, followed by another of the same magnitude in September. This scenario could maintain upward pressure on both nominal and real yields, which would weigh on gold prices in the short term. Consequently, bullion may face further losses as we enter the third quarter.
XAUUSD BUY 1904-1906 💯💯
✅ TP1: 1912
✅ TP2: 1917
✅ TP3: 1922
🛑 SL: 1900
As a consequence, the rise in interest rates bolstered the U.S. dollar against currencies with lower yields. This caused the DXY index to recover from its losses during the previous trading session and enter positive territory. The strengthening dollar initially created an unfavorable environment for precious metals.
The impressive resilience of the U.S. economy is expected to provide justification for the Federal Open Market Committee (FOMC) to raise interest rates again in the coming months, aligning with its stated plans. Although the Fed temporarily halted its rate hikes in June, it indicated that the process was not yet complete and projected an additional tightening of 50 basis points by the end of the year.
Initially, the markets were doubtful of the Fed's hawkish approach due to concerns about an impending recession. However, new data has significantly weakened this assumption. Not only is the economy not experiencing a downturn, but it also appears to be stabilizing and gradually improving.
Given this situation, it is likely that there will be a 0.25% rate hike in July, followed by another of the same magnitude in September. This scenario could maintain upward pressure on both nominal and real yields, which would weigh on gold prices in the short term. Consequently, bullion may face further losses as we enter the third quarter.
XAUUSD BUY 1904-1906 💯💯
✅ TP1: 1912
✅ TP2: 1917
✅ TP3: 1922
🛑 SL: 1900
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