Gold Hits an All-Time High of $2,388.14/Ounce on Friday

Lebanese Forex Market

Lebanese authorities announced the decision of unifying the LBP exchange rate against USD at 89,500 starting Feb 16 2024. This rate represents the BDL’s electronic platform rate which is used for calculating commercial banks and BDL’s balance sheet although the official exchange rate remains for the moment at USD/LBP 15,000.

The Lebanese exchange rate has maintained a relatively stable exchange rate of approximately 89,700 USD/LBP in the parallel market by April 19, 2024. It’s crucial to recognize that this stability isn’t backed by robust fundamentals. Given the ongoing financial crisis and the absence of a recovery plan, Lebanon’s future remains uncertain and unstable.

As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 95,245.9 to €/LBP 95,317.5 by April 19, 2024. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound increased by 0.73% standing at 242.63 points on April 19, 2024.

International Forex Market

The USD Index (DXY) slightly rose by 0.04% to stand at 106.08 on April 19, 2024 as traders react to U.S. economic reports. Indeed, U.S. Unemployment Claims remained unchanged at 212K by end of week of April 18, compared to analyst consensus of 215,000, showing labor market resilience. Moreover, the Philly Fed Manufacturing Index, which is a regional federal-reserve-bank index measuring changes in business growth and covering the Pennsylvania, New Jersey, and Delaware regions, surprisingly jumped to 15.5, which starkly exceeded expectations.

The Euro slightly appreciated against the dollar by 0.09% over the course of the week and reached EUR/USD 1.0653 by April 19^th, although the ECB will likely start cutting rates before the Fed. Looking ahead, the financial markets are poised to respond to speeches from key central bank figures. The Eurozone’s attention will be on German Bundesbank President Nagel, whose remarks could provide further clues on the monetary policy trajectory.

The British Pound depreciated against the dollar by 0.06% over the course of the week and reached GBP/USD 1.2445 by April 19th. Indeed, Bank of England Governor Andrew Bailey reported that he is intent on cutting interest rates soon and the market is expecting the first cut in June. Moreover, inflation in UK reached 3.2% by end of March, down from February’s 3.4% but beating market expectations at 3.1%.

Also, the Bank of England expect that the Federal Reserve will only cut interest rates once in 2024. The Bank of England and other central banks would prefer to move in tandem with the Fed to minimize any potential currency weakness. A weaker Pound-Dollar rate would boost import costs, which is particularly unwelcome given ongoing rises in global oil and gas prices.

Furthermore, the Japanese Yen depreciated by 0.79% to reach USD/JPY 154.44 by April 19th; the Japanese yen is fundamentally weak, and potential interventions from the BoJ are the key risk for USD/JPY bulls in the near term. Bank of Japan board member Asahi Noguchi favored a patient approach to further monetary policy tightening. Noguchi said the Bank of Japan would raise interest rates more slowly than its peers lifted rates during rate hike cycles. However, the Bank of Japan must also grapple with the effects of a weaker Japanese Yen on the economy. A weaker Japanese Yen leads to higher import costs, impacting household spending.

For other currencies in Europe, the Swiss Franc appreciated by 0.63% by the end of this week to stand at USD/CHF 0.9079 on Friday April 05, 2024. Elsewhere, the Chinese Yuan and Australian dollar depreciated respectively by 0.04% and 0.68% to stand at USD/CNY 7.2405 and AUD/USD 0.6423 on Friday April 19, 2024. Finally, the Canadian dollar appreciated by 0.19% to stand at USD/CAD 1.3749 by Friday April 19, 2024.

Commodities

Gold prices increased by 1.87% over the course of the week to reach $2,388.14/ ounce on Friday April 19, 2024. The Gold price has seen an uptick, rising to new heights on Friday amid escalating geopolitical tensions and stubborn US inflation. Reports of military engagements in Iran, coupled with Israel’s recent retaliatory strikes, have bolstered gold’s status as a safe-haven asset, driving prices upward as investors seek stability.

Adding another layer to the gold price forecast, China’s ongoing accumulation of gold reserves provides a substantial undercurrent supporting the market. Many economists are predicting this trend to continue, further enhancing the upward trajectory of gold prices in the international markets.

Crude oil prices decreased by 2.29% and reached $83.7 on April 19, 2024, despite Israeli missile strikes on Iran, which raised alarms over potential disruptions in Middle East oil supply. This development has escalated geopolitical tensions, with fears of further escalations affecting the stability of oil supply chains. As a matter of fact, U.S. and global media reported explosions in Isafahan, Iran, causing disruption in air traffic and increasing uncertainty in oil markets.

These events underscore the fragile nature of oil supply stability in the region, directly influencing daily forecasts for oil and potentially affecting natural gas markets due to the interconnected nature of global energy supplies.

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