Gold rose as the dollar weakened after the disintegration of the growing Covid protests in China.
Gold rose as the weakening dollar supported the metal, while a senior Fed official received a message that more rate hikes would be made.
This year, the US Federal Reserve’s aggressive monetary tightening caused dollar and bond yields to rise, while gold fell 15 percent from its March peak. Because the precious metal is priced in dollars and does not yield interest, it tends to correlate negatively with the dollar and currencies.
Gold tumbled on Monday as the dollar rallied after concerns that the situation with the Covid situation in China would deteriorate. Violent protests across the country dispersed as authorities deployed a massive police presence in the capital and other major cities on Monday.
Investors will be watching economic data this week, including nonfarm payrolls and unemployment, to watch for signs that the Fed will soon ease its monetary tightening path. On Monday, New York Fed President John Williams said interest rates should rise further and stay high until next year but could be lowered by 2024.
“Gold is currently sitting in the middle of a potential new range between the $1,780 resistance, a key support level in the first half of the year, and the $1,730 support in September and October, a major resistance level in September and October,” Craig Erlam, Oanda Senior Market Analyst, said in a note.
