Dollar slumps after hitting new record

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Dollar slumps after hitting new record

The dollar slipped after hitting a new record in the last two years, as it rose from its lowest level in more than two years.

The dollar s advance stalled on Tuesday, providing relief for the non-interest bearing metal. Fear of a global recession sparked by central banks tightening has triggered a big gain in the dollar, despite the fact that gold is seen as a traditional haven in times of economic distress.

The fall in other major currencies, including the pound and yen, could affect commodities priced in the dollar. The markets for energy and raw materials have taken a hit as key gauges of the Bloomberg Commodity Spot Index fell to the lowest since February.

The focus is still on dollar strength, and it could still be weighed on the precious metal, said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services. He said that the sentiment remains very negative as more rate hikes to tame inflation will hurt gold's safe-haven status, and he expects bullion to go toward $1,550 an ounce in the coming weeks.

The market may have to deal with a lot of volatility this week due to the release of US inflation data and public speaking engagements by Federal Reserve officials, including Vice Chair Lael Brainard and New York Fed President John Williams.

Bullion is in a bear market after a 20% drop from the 2020 record. The metal price movements usually have a negative correlation with the dollar and interest rates, as it is priced in the US currency.

Spot gold climbed by 0.6% to $1,631. 27 an ounce at 12: 34 p.m. in Singapore. The Bloomberg Dollar Spot Index declined by 0.3% after Monday's 1% gain.