Gold fell by 4%, the lowest level in seven-weeks on Wednesday, as the strong data on New U.S. Single-family Home Sales in April supported the view that the economy may be strong enough for the Fed to hike interest rates soon.
Gold is strongly affected by rising interest rates, which increases the cost of acquisition of non-interest earning assets. Gold traded yesterday at $1,217 and could re-test level of $1,230 before Yellen speaks tomorrow about the economy at Harvard.
The USD Index declined yesterday by 25 pips, and settled at 95.35.
The EUR recovered during yesterday’s trading session after Greece's 'breakthrough' bail-out deal. After six-year financial crisis, Eurozone finance ministers agreed with Greece on Wednesday on what they called a "breakthrough" deal that could address Athens' requests for debt relief.
The Eurogroup ministers agreed to release 10.3 billion euros ($11.42 billion) in new funds for Greece. Officials believe that Greece could be able to reach a primary surplus of 3.5% of GDP and keep it at that level for a decade. The “new phase” agreement could push the single currency to touch $1.12.
The pound surged to $1.47 for the first time since 3rd of May, positively affected by a new Survation opinion poll. The poll showed 44% support staying in the EU and 38% are exiting the EU. From a technical point of view, the cable could decline to $1.45, as GBP outlook remains mixed.
USD pared its gains vs. JPY but managed to settle above 110 levels.
Oil prices surged as U.S. inventories fell sharper than expected by 4.23 million barrels last week and WTI touched at $50.
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