Gold Falls As Dollar Rally Continues

Gold prices were muted early Friday as the dollar extended gains from the previous session when strong U.S. inflation data and trade war concerns boosted demand for the greenback. The XAUUSD pair was down about 0.1% at $1,246.11 an ounce at 0050 GMT. U.S. gold futures for August delivery were little changed at $1,246.30 an ounce.  The U.S. dollar hit a six-month high against the Japanese yen on Friday. While dollar index rose over 0.1% in early Asian market hours. U.S. consumer prices recorded their largest increase in nearly 6-1/2 years in the year through June, while the monthly pace continued to suggest a steady buildup of inflation that could keep the Federal Reserve on a path of gradual interest rate increases. Fed Chairman Jerome Powell said he believes the U.S. economy remains in a “good place,” with recent government tax and spending programs likely to boost gross domestic product for perhaps three years. Asian shares rose on Friday following gains on Wall Street overnight, as concerns over an escalating U.S. trade war with China took a breather following Fed Chair Powell’s speech.

Silver continues to decline for second consecutive session. It is general belief that when gold price rises, silver rises higher and it is a widely believed fact that silver outperforms gold on any given bullish market two times out of three. With dollar gaining strength in broader market and US dollar being treated as a pseudo safe haven, growing demand for US dollar in broader market has caused silver to move back into $15 handle and XAGUSD pair is currently trading at $15.84 with possibility of continued decline as trading session closes for the week.

Oil prices fell on Friday as markets digested big swings earlier in the week that have left both major benchmarks facing a second weekly loss and largely shrugged off a warning about tightness in spare capacity. Brent crude dropped 35 cents or 0.5%, to $74.10 a barrel by 0657 GMT. On Thursday it gained $1.05 a barrel rebounding from a session low of $72.67. It is heading for a weekly fall of nearly 4%. U.S. benchmark West Texas Intermediate crude edged down 12 cents to $70.21 a barrel after falling 5 cents in the previous session. It is heading for a weekly decline of nearly 5%. It has been a wild week for oil prices with both the main benchmarks suffering heavy losses as traders focused on the return of Libyan oil to the market amid concerns about a China-U.S. trade war.