Gold Edges Up As Spike in Chinese Yuan Pressures US Greenback

Gold prices drifted higher in Asian trade on Wednesday, extending gains into a second session, as the U.S. dollar softened against China’s yuan and Euro. Spot gold XAUUSD is currently trading bullish, Up 0.35% on the day to $1,215.36 an ounce, after rising 0.4% in the previous session. U.S. gold futures GCcv1 were also up 0.32% at $1,222.30 an ounce.

The dollar-CNH is a bit under pressure this morning and we’re seeing some buying on the back of that. China’s yuan held firm near a one-week high versus the dollar on Wednesday, following firmer equities, extending its rise after the central bank last week took steps to curb the currency’s decline. A weaker dollar makes greenback-denominated gold cheaper for holders of other currencies. Asian shares rose on Wednesday on the back of firmer Wall Street earnings while expectations for increased Chinese stimulus helped take the edge off wider concerns about the worsening Sino-U.S. trade dispute.

Gold Locked in Neutral Price Range despite USD’s Weakness

Signals are mixed for spot gold, as it seems to be stuck in a neutral range of $1,206-$1,220 per ounce. However investors continue to remain on edge observing market proceedings as the United States will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative’s office said on Tuesday as it published a final tariff list targeting 279 imported product lines and retaliatory measures from China could affect Dollar’s momentum. European Parliament has agreed to ease tough new liquidity rules for banks trading gold, marking a success for the London Bullion Market Association’s (LBMA) campaign to revise the plans.

Silver also took advantage of USD’s weakness and made headway in the spot market. Silver continued to trade upwards for the second consecutive session and spot silver XAGUSD is currently trading at $15.42 up 0.24% on the day after touching an intra-day high of $15.466 in early Asian market hours.

Oil prices were trading up modestly on Tuesday prior to the release of the API data on inventories and failed to move much after the data release. The American Petroleum Institute (API) reported a crude oil inventory draw of 6 million barrels of United States crude oil inventories for the week ending Aug 4, compared to analyst expectations that this week would see a draw in crude oil inventories of 3.33 million barrels.

US Crude Oil saw minor boost but is trading mostly flat at 69.73/b up 0.07% on the day. While some resistance can be found around $70/b price handle, Crude oil is expected to see more volatility moving forward as there is a lot of news surrounding Crude oil in global market such as the United States levying the first round of sanctions on Iran, with the promise of more to come in November and the mystery surrounding Saudi Arabia oil production figures which some say was up in July and others say was down.