The U.S. dollar remained strong this week rising from a low of 102 to a high of 103.8 on Wednesday. The stronger U.S. dollar has been affecting gold, crude oil, and Brent crude oil prices for a week. Brent crude dipped 14 cents reaching $79.41 per barrel on Wednesday. On the other hand, Crude oil dipped by 11 Cents hitting a low of $74.26 a barrel. In addition, gold fell below the $2,030 mark and has been struggling to climb above the $2,050 level for a week.
Therefore, the U.S. dollar is dominating the markets this month making the commodity market experience a downturn. The demand for the U.S. dollar is now high compared to other leading global currencies in the forex market. The U.S. dollar is now hovering around a six-week high against other leading currencies like the Euro, Pound, and Yen.
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U.S. Dollar Grows Stronger, Oil & Gold Prices Could be Impacted Further
The tensions in the Red Sea made the oil and gold markets stand on a slippery slope in January this month. The geopolitical tensions risk the supply of oil leading to uncertainty in the markets. The development is also being shown in the XAU/USD charts leading to gold slipping south for more than a week.
“Without current geopolitical tensions, we believe crude would sell off meaningfully. Over time, we expect supply risk premiums to decouple from conflict risk, analogous to Russia-Ukraine. Barring escalation in the Middle East, we expect crude prices to stay in the current range for 1Q24. We do not anticipate supply loss,” said Vikas Dwivedi, global energy strategist at Macquarie to the Economic Times.
The U.S. dollar bounced back from its low of 101 early this month reaching 103.8 points during week four. If the U.S. dollar continues its momentum, it could climb above the 106 mark in the coming months.