The dollar index (DXY00) is up +0.05%, consolidating mildly above last Friday’s 3-week low. The dollar is seeing some short covering after last week’s decline.
However, today’s -0.8 bp decline in the 10-year T-note yield is undercutting the dollar by hurting interest-rate differentials. Also, today’s -0.5% decline in WTI crude oil prices is dovish for Fed policy and negative for the dollar.
Markets are pricing in a 15% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
EUR/USD (^EURUSD) is down by -0.11%. The euro is being undercut by today’s mildly higher dollar. The euro continues to be undercut by social unrest in France, which may be prompting some foreign investors to flee French assets.
Markets are pricing in a 6% chance of a +25 bp ECB rate hike at the ECB’s next policy meeting on October 29.
USD/JPY (^USDJPY) is down -0.07%. The yen continued to find support after Reuters reported Tuesday that the BOJ will raise its inflation forecast for fiscal 2027 at its policy meeting later this month, a hawkish factor for BOJ policy.
Markets are pricing in a 4% chance of a +25 bp BOJ rate hike at the next policy meeting on October 30.
December COMEX gold (GCZ26) is up 8.8 (+0.21%), and December COMEX silver (SIZ26) is down -0.245 (-0.42%).
Gold is seeing support today from slightly lower T-note yields, but is being undercut by the slightly higher dollar index.
Gold prices were undercut Tuesday when Russia’s central bank reported reducing its gold reserves to 72.8 million ounces as of October 1, the lowest level in 7 years. Russia’s central bank is the sixth largest holder of gold among the world’s central banks.
Recent fund support for precious metals is bullish for prices, as long holdings in gold ETFs climbed to a 4-year high on Tuesday. Long holdings in silver ETFs rose to a 6.5-month high last Friday.
Strong central bank demand for gold is supporting gold prices, after recent news showed that bullion held in China's PBOC reserves rose by 740,000 ounces to 77.47 million troy ounces in September, the largest increase in three years and the twenty-third consecutive month the PBOC boosted its gold reserves.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.