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Colin First
Gold daily chart, December 24, 2018

Gold prices climbed on Monday, holding ground near a six-month high hit last week, as investors remained concerned about political uncertainty in the United States and global economic slowdown. A partial U.S. government shutdown was almost certain to drag through the Christmas holiday after the Senate adjourned on Saturday without breaking an impasse over President Donald Trump’s demand for more funds for a border wall.

Political instability in the United States at a time when the global economy is weakening sent equities sliding, further boosting demand for gold as an impact from concerns of inversion curve following Fed rate hike on US greenback decreased the demand and attractiveness of USD as a safe haven asset.

Gold Gains on Safe Haven Demand Amid Bearish USD in Broad Market

A weaker dollar is positive for USD denominated safe-haven assets and precious metals as it boosts participation of investors from emerging markets, especially from India & China who are two biggest importers of gold owing to lower exchange rates. As of writing this article, spot gold XAUUSD pair is trading at $1262.82 per ounce up by 0.56% on the day, while US Gold futures GCcv1 were trading at $1266.20 per ounce up by 0.64% on the day.

Moving forward Investors are expected to start allocating some funds to gold considering that global growth is slowing and equity markets remain muted. This is a good time for investors who stocked up on gold in recent past when prices were low as gold is expected to resume bullish price action in near future.

Spot Silver XAGUSD is currently trading at $14.73 per ounce down by 0.67% on the day. Oil prices rose more than 1 percent on Monday on signs that the recent price plunge may start crimping supply from the U.S., currently the world’s biggest oil producer, though concerns about global economy continue to weigh. Crude prices rebounded from sharp declines last week.

Brent fell 11 percent for the week, dropping to its lowest since September 2017 on Friday, while WTI also dropped 11 percent last week, its worst weekly performance since January 2016. Both benchmarks were down more than 35% from their recent peaks in early October. However, the price plunge has caused U.S. shale oil producers to curtail drilling plans for next year. The macroeconomic picture and its impact on oil demand continue to pressure prices keeping crude oil well near recent lows. Spot Crude Oil WITUSD is currently trading at $45.48 per barrel up by 0.89% on the day.

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