Gold Continues To Hit New High’s on Post Holiday Season Trade Over Increased Safe Haven Demand

Precious metals continue bullish price action on cautious investor stance ahead as investors await Fed Chair Powell views and non-farm payrolls scheduled to release tomorrow.
Colin First
Gold daily chart, January 03, 2019

Gold prices scaled a more than six-month peak on Thursday as worries about a global economic slowdown and volatility in equities boosted safe-haven buying, while a weaker dollar offered support. The weaker dollar lent some support for gold. People are more interested in gold as the stock markets are under pressure and are looking at gold as a safe haven owing to US dollar losing safe haven status over ongoing political and economic woes in United States. A softer dollar makes the greenback denominated bullion cheaper for investors holding other currencies especially boosting participation from China and India two of world’s biggest gold markets. Tension continues to escalate in US as meeting between U.S. congressional leaders and President Donald Trump yesterday saw no sign of an agreement to end a partial government shutdown.

Crude Oil Continues Subdued Price Action in Broad Market

Moving forward investors are on lookout for Eurozone flash PMI’s, US NFP data and Fed Chair Jerome Powell scheduled to release tomorrow for cues on medium term outlook of greenback which will greatly affect price action of gold in broad market. Gold is highly susceptible to Fed rate hikes, an increase in interest rate puts a hamper on gold bull’s progress. Tomorrow’s macro data and Fed speech outcome will give clues on Powell’s stance over further rate hikes which will help guess how far gold could climb in near future over safe haven demand from ongoing geo-political and economic crisis. As of writing this article, spot gold XAU/USD is currently trading at $1288.61 per ounce up by 0.32% on the day while US gold futures GCcv1 is trading at $1290.10 per ounce up by 0.46% on the day.

Spot Silver XAG/USD is currently trading at $15.59 per ounce up by 0.43% on the day. Oil prices fell today amid volatile currency and stock markets, and as analysts warned of an economic slowdown for 2019 just as crude supply is rising globally. In physical oil markets, top exporter Saudi Arabia is expected to cut February prices for heavier crude grades sold to Asia by up to 50 cents a barrel due to weaker fuel oil margins, respondents to a Reuters’s survey said on Thursday. The slowdown in China and bearish rout in global equity & Forex markets are also affecting crude oil price action in broad market. But major pressure to crude oil market comes in form of glut scenario in supply and inventory. However OPEC’s planned production and supply cut is expected to hit market from this month and if it has any effect on oil supply and demand dynamics we can expect crude oil price to raise a bit. Spot crude WTI/USD is currently trading at $45.93 per barrel down by 0.48% on the day.

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