A weaker dollar pulls gold up, while recession fears push the DJIA to its lowest since early 2021.
Closing the session June 16, gold price The world spot market rose more than $23 to $1,858 an ounce. The market went up when the USD depreciated due to the prospect of the US Federal Reserve (Fed) raising interest rates strongly. Yesterday, the coin fell 1.6% against a basket of major currencies.
“Gold started to be attractive because investors were worried about the US economy going down,” said Edward Moya, an analyst at OANDA, “As the USD rally has peaked and investors are now turning to haven assets. hidden, the prospect of gold is quite bright.”
Recently, precious metals have moved in the same direction as the stock and bond markets. But yesterday, gold rose again as Wall Street plunged due to recession fears.
Even so, the high interest rate environment is also not favorable for gold. If the Fed succeeds in controlling inflation without pushing the US into a recession, the precious metal will lose its appeal again, warned Carsten Menke, director of Next Generation Research at Julius Baer.
The Fed on June 15 announced the strongest interest rate increase in nearly 30 years. Fears of inflation also led many other central banks to follow suit. Yesterday, the Swiss Central Bank unexpectedly raised interest rates for the first time in 15 years. The Bank of England also raised interest rates.
On the market US stocksthe DJIA yesterday fell below the 30,000 mark for the first time since the beginning of last year, as investors worried that the Fed’s move would push the US into a recession.
Closing the session, DJIA lost 2.42% to 29,927 points. The S&P 500 fell 3.25% to 3,666 points. Nasdaq Composite fell the most, with 4%, to 10,646 points. This is the lowest level since September 2020.
The S&P 500 and Nasdaq Composite thus plunged deeper into the bear market. These two indexes have dropped 24% and 34% respectively since their most recent peak. The DJIA is also close to this, having dropped 19% since the January peak.
The new data released yesterday further showed that economic activity in the United States declined. New home construction fell 14% in May, much stronger than forecasts of 2.6%. The Philadelphia Fed’s business activity index fell for the first time since May 2020.
Home Depot, Intel, Walgreens, JPMorgan, 3M and American Express stocks hit new 52-week lows. Tech groups like Amazon, Apple and Netflix are all down nearly 4%. Tesla and Nvidia lost 8.5% and 5.6%, respectively.
Shares of airlines United and Delta fell 8.2% and 7.5%, respectively. And cruise group Carnival, Norwegian Cruise Line and Royal Caribbean even plunged 11%. The entire S&P 500 major industry group went down. In the DJIA, only 4 stocks increased.
Ha Thu (according to Reuters, CNBC)