Gold Edges Up Slightly As Turkish Lira Becomes Stable

Gold prices edged up on Tuesday from an 18-month low hit in the previous session as a break below a key psychological level triggered buying interest, while the U.S. dollar pared gains after scaling a 13-month high amid stabilizing Turkish lira.

Spot gold XAUUSD is up 0.11% on the day at $1,194.91 an ounce, as of writing this article. In the previous session, the bullion hit $1191.66, its lowest since Jan. 30, 2017. Meanwhile, US Gold Futures GCcv1 is currently trading at $1201.60 an ounce, up 0.22% on the day. As stop-loss selling pushed the market lower below $1,200, fresh buying sentiment was found in the gold market as US Greenback weakened from selling activity. However, the market is still under pressure as the U.S. dollar is still very strong.

Also, interest rates are poised to go higher and market sentiment continues to be bearish on gold. The dollar index DXY which measures the greenback against a basket of six major currencies, is down about 0.01% on the day at 96.31, after climbing to a 13-month high on Monday.

Precious Metals Could Gain Momentum in Case Turkish Crisis Worsens

People are betting on better growth prospects in the United States, hurting gold’s prospects. Technically, gold is looking bad and may test $1,165 in near future. Gold, which is traditionally considered as an insurance against political and economic uncertainty, has failed to benefit this year as investors prefer currency safe haven instruments over USD denominated precious metals.

Investors have made a beeline for U.S. Treasuries, seen as the ultimate safe haven, which meant they had to buy dollars greatly affecting sentiment and momentum around precious metals. If Turkey contagion spreads further, we may see some buying (in gold). But, as of now, the U.S. dollar continues to be a safe haven buying option. Investors’ bearish stance on precious metals continued to reflect in record short positions and in the outflow of gold exchange-traded products. Spot silver also managed to make the most of market scenario as USD’s temporary pullback has pushed XAGUSD to $15.04 up 0.31% on the day.

Crude oil futures were higher during mid-morning trade in Asia Tuesday as the market anticipated a fall in mid-week US crude inventory data while digesting OPEC’s latest report. A preliminary report on last week’s US inventory levels is due for release by the American Petroleum Institute later today and more definitive numbers by the US Energy Information Administration on Wednesday. Despite the positive expectations, activity was muted Tuesday as market focus remained on OPEC’s monthly report on oil fundamentals, which forecast global demand for OPEC’s crude at 33.40 million b/d for both the third and fourth quarters. That is 1.08 million b/d more than the bloc’s July production level, as assessed by the independent secondary sources used by OPEC to track member output.

Saudi Arabia’s output fell 200,000 b/d in July to 10.29 million b/d, according to OPEC’s monthly report which indicates Saudi failed to honor its agreement with OPEC allies to boost production but the Turkish crisis weighed down the market resulting in Crude oil price taking a steep fall in later half of Monday’s trading session. WTIUSD is currently trading at $68.09/b up 0.53% on the day.