Gold Shoots to the Stars on Dollar Weakness

Market speculation over lower US interest rates, Dollar weakness and geopolitical tensions in the Middle East boosted Gold’s allure this week. With a handful of major central banks signaling potential rate cuts in the future, Gold is set to shine especially when considering how it performs well in low interest rate environments. Should the G20 meeting end with no resolution to the ongoing US-China trade tensions and fears over slowing global growth make a return, Gold has the potential to appreciate further.

Looking at the technical picture, Gold has already conquered $1400 on the daily charts. A weekly close above this level is seen encouraging a move towards $1413.

Currency spotlight – GBPUSD

The rebound witnessed on the GBPUSD has little to do with a change of sentiment towards the Pound but instead Dollar weakness. A cautious Bank of England coupled with political risk in the UK and Brexit uncertainty is likely to keep the Pound depressed. While the GBPUSD has the potential to push higher in the near term, upside gains may be capped around 1.2750. Taking a look at the technical picture, the GBPUSD remains under pressure on the daily charts. Sustained weakness below 1.2700 is seen opening a path towards 1.2620.

Commodity spotlight – Oil

Brent futures have climbed past the $64/bbl handle to their highest level since May, after gaining almost four percent overnight. Geopolitical tensions appear to be doing OPEC+ a favour by supporting Oil prices, ahead of the Vienna meeting between major Oil producers, which has just been pushed back to early July.

The OPEC+ alliance appears set to extend its supply cuts programme into the second half of 2019, as producers look to build a more sustainable floor under Oil prices and rebalance global markets. Despite Oil prices climbing on the back of the flare-up in geopolitical tensions, the overarching theme of waning global demand remains an ongoing concern. Oil bulls can still take heart at the prospects of more upside catalysts, including the expected OPEC+ extension of supply cuts, rising geopolitical tensions, and resurrected hopes for a resolution to the US-China trade standoff.

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