As speculation grew that the U.S. Federal Reserve may increase interest rates more quickly this month to combat rising inflation, gold prices declined.
Futures for gold decreased by 0.41%. The consumer prices index in the United States increased by about 10%, the largest in four decades, according to data that was revealed yesterday.
There has been an increase in speculation that the Fed will raise interest rates by an unprecedented one percentage point later this month.
Despite a decline in exports of crude and processed products from Russia due to Western sanctions and supply interruption in Libya, oil prices have fallen over the previous two weeks due to concerns about the recession.
Oil prices dropped as traders concentrated on the possibility of a significant rate increase in the United States, which would reduce inflation but also reduce oil demand. The strong dollar, which also has a negative impact on oil prices, is a collateral consequence of rising inflationary fears.
Although the physical markets are still strong, the main force behind them right now is the shift in investors’ attitudes.
The Fed rate increase is anticipated to come after the Bank of Canada made a comparable unexpected move. Oil prices have also been restrained due to concerns that COVID-19 limits will be implemented in several Chinese cities to stop the spread of a highly contagious subvariant.
As refiners anticipated tightening steps to reduce demand, China’s daily imports of crude oil in June fell to their lowest level in the previous three years.
In an effort to safeguard its already meagre level of reserves, the Argentine government increased the tax it levies on foreign currency purchases made using credit cards by ten percentage points on Wednesday.
The action, which applies to both debit and credit cards, comes as the South American nation also strives to control inflation exceeding 60% and pressure on its currency.
It also applies to airfare for international travel if access to the central bank-controlled foreign exchange market is required for transaction completion.
Argentina has to build up its foreign exchange reserves in order to satisfy goals set by the International Monetary Fund.
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