Oil and gold are losing, and the dollar continues to outperform its competitors
Oil prices fell to the lowest level in 8 months amid fears of a global recession, gas prices also fell due to the decline in demand, and gold fell to its lowest level in two and a half years, while the US dollar benefited, which continued its journey of superiority over other major currencies, especially the euro and the pound sterling. which have descended to historical levels.
Oil prices fell about 5% on Friday to an 8-month low, with the dollar reaching its highest level in more than two decades amid fears that higher interest rates would push major economies into recession, reducing demand for oil.
Brent crude futures fell 4.8% and settled at $86.15 a barrel, down by 6% during the week.US West Texas Intermediate crude also fell 5.7%.
The US Federal Reserve raised interest rates by 75 basis points last Wednesday, and central banks around the world followed suit in raising interest rates, increasing the risks of an economic slowdown.
In the natural gas markets, US gas contracts fell about 4% at the close. Gas prices recorded their lowest level in 10 weeks, as a result of lower oil prices and expectations of a mild climate early next month, which means a decline in demand for heating and cooling fuels as well.
Gas prices were closed below $7 per million British thermal units, the lowest level since mid-July. US natural gas prices fell about 12%, the largest weekly decline since last June.“We are seeing a relentless rally in the dollar here, and that will keep gold vulnerable in the short term,” said Edward Moya, chief analyst at Wanda. “It is clear that the economy is heading towards a recession.
The risks of a hard landing are high and this is still driving inflows towards the dollar, which is bad news for gold,” he added. Although gold is seen as a hedge in times of political and economic uncertainty, raising interest rates weakens its attractiveness because it does not generate any return.
The euro and the pound sterling against the dollar fell on Friday to their lowest levels in 20 and 37 years, respectively, after surveys showed an acceleration in the slowdown in trade activity across the euro zone and Britain this month, suggesting that economies will enter a recession.
The pound recorded its biggest weekly drop in two years against the dollar, after touching a 37-year low of $1.0840. The British pound was the biggest loser during the day against the dollar, as it fell 3.4% to $1.0874, and it also suffered its biggest daily percentage loss in two years.
Sterling was also affected by the announcement of the new British Finance Minister Kwasi Quarting of tax cuts and support measures for families and businesses, in addition to the British Debt Office setting plans to issue bonds during the current financial year of 72 billion pounds ($ 79.74 billion) to finance the stimulus.
The common European currency recorded its worst weekly performance since March 2020. The Japanese yen also fell 0.6% to 143.30 per dollar, but it achieved weekly gains for the first time in more than a month, amounting to 0.3% after the Japanese authorities intervened in the markets on Thursday to support the currency for the first time since 1998.
