Friday brought another capital flight from across the ocean, which was used by the zloty. Gold also gained, setting a new all-time price record.
Core Inflation Above Expectations
On Friday, we got data on core inflation in Poland. Prices, after deducting food and energy values, are growing by 3.8% per year. This is, of course, less than consumer inflation, but that’s not surprising. The last increase in consumer inflation was largely caused by increased energy costs. What is worrying, however, is that core inflation has risen more in July than analysts thought. Even though the NBP still declares no chances for interest rate cuts this year, the situation both home and abroad is increasingly validating this scenario. As a result, rising inflation is a factor that strengthens the zloty against major currencies. We witnessed this move on Friday evening.
The Dollar is Losing Again
Friday’s readings started poorly for the American currency. At first, housing market data turned out to be significantly lower than expectations, especially in terms of started house constructions. However, then the University of Michigan Index performed better than forecasts, but the market was already in a mood for reversal. At the end of the day, we had another drop in the number of drilling rigs in the US. On one hand, this is a typical reading for the oil market. But it’s worth noting that the decreasing number of drills is an announcement of less demand for raw materials. This is therefore a signal of an expected recession, and this justifies the depreciation of the American currency.
All-Time Gold Price Record
Gold prices shot up again on Friday. The price of the yellow metal reached 2548 dollars per ounce. That is more than 25 dollars better than the previous record. The reasons for the increases are clear, only analysts believed in them more. On one hand, there are interest rate cuts in the US, resulting in lower returns on investments based on the interest rate or dependent on it. On the other hand, there are tensions in the Middle East, a topic current for many months. However, recent concentration of events – the possible involvement of Iran and further actions of Israel in the Gaza Strip, which are even difficult for its supporters to justify – cause investors to look at gold more favorably.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: https://ceo.com.pl/zloto-z-kolejnym-rekordem-dolar-znow-traci-55489
