Gold prices higher at open, earnings pending

Gold rebounds near $2014 per ounce after sharp gains from friday

By Nadia Elbilassy | @Nadia Elbilassy | 5 July 2023

Midday Market update
  • Euro achieves all-time highs near 1.10 after Lagarde’s statements from the IMF meeting

  • Swiss franc rises after statements by the central bank governor

  • Christopher Waller Fed member, warns inflation is still very high

Gold starts the week on a good note

Gold began the week with a slight increase after experiencing sharp declines last week, below $2000. The yellow metal is seen now stabilizing near $2007.

Christopher Waller, US Fed official made strong statements on Friday about the current state of inflation, saying that it is still very high and that the task related to it is not over yet.

Waller emphasized the need for further tightening of monetary policy due to a strong labor market and inflation above the bank's targeted levels. Although the main inflation index has slowed down, the core index, which excludes food and energy prices and is of interest to the US Federal Reserve, has risen to 5.6%.

The euro near all-time highs against the dollar

The euro opened the week with a modest gain against the US dollar, trading near $1.0992, as it continued its recent trend of increases against many major currencies.

Christine Lagarde, the governor of the European Central Bank, stated during the International Monetary Fund meeting that inflation in the euro area is expected to decrease alongside monetary policy tightening to address demand weakness.

She also noted that wage growth will support core inflation and mitigate its impact on the labor market, aiding its gradual return to the bank's targeted levels. Lagarde anticipates economic growth in the euro area over the upcoming quarters, fueled by a strong labor market, supply chain improvements, and lower inflation rates.

The upcoming release of the Purchasing Managers' Index for services and manufacturing in the euro area is highly anticipated by markets, with prospects of continued recovery in these sectors.

Swiss franc rises after statements by the central bank governor

The Swiss franc extended its recent gains against the US dollar on Monday, as the USD/CHF pair traded near 1.3348 in early-week trading.

At the end of last week, Thomas Jordan, the governor of the Swiss National Bank, confirmed that the bank does not rule out the possibility of tightening monetary policy again during the upcoming Swiss National Bank meetings.

Despite the slowdown in the consumer price index, expectations suggest the possibility of the bank raising interest rates by about 25 basis points during the June meeting to ensure price stability in the medium term.