The European Commission's reported Eurozone Economic Sentiment Index rose 3.4 points in June from the previous month to 117.9, a record high reached in May 2000 and well above the long-term average and pre-pandemic levels.
Hopes for a strong economic recovery, which is progressing with the lifting of restrictions and vaccination against COVID-19, appear to be an important contributor.
Gold market sentiment far from excellent
Very good sentiment in the markets and chances of interest rate hikes in the US in late 2022 and early 2023 do not seem to be serving the gold market. Bullion prices at the end of June remained close to the 7-week minimum, at the level of USD 1760. It seems that June may be the worst month on this market since 2016.
Recall that the source of the reductions may have been the statements of US Federal Reserve officials, who at the beginning of the month accelerated the expected pace of monetary policy tightening. Strong sentiment towards the dollar also affected gold which is a so-called safe haven in the investor market.
On a monthly basis, gold prices could fall about 7 percent, the most since November 2016.
Delta vs. oil prices
Oil prices fell for a second straight day on Tuesday as a surge in COVID-19 cases in Asia and the rapid spread of the delta variant of the coronavirus in some European countries revived concerns about a recovery in fuel demand.
Investors are also awaiting Thursday's OPEC+ meeting, where the alliance is expected to announce a 550,000 barrel-a-day production increase for August, just a quarter of the expected global deficit for the month.
Last week, oil was at its most expensive since October 2018 and still has a return of more than 50 percent this year.
Will currencies twitch on Friday?
The currency market is waiting for the release of data from the US labor market. Hence, the volatility of the dollar pairs may be limited, and only Friday may bring bigger rate changes.
With good data, the dollar would have a chance to continue the appreciation initiated by the Fed's change in its projections, as improving the situation on the labor market may mean an acceleration of interest rate hikes in the US.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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