Gold Hits New Lows As US Greenback Gains Ground

Gold prices hit a fresh six-and-a-half-month low on Wednesday as the U.S. dollar steadied and investors turned to other safe-haven assets amid expectations of more interest rate hikes by the U.S. Federal Reserve. Spot gold fell for a third straight session and was down 0.3 percent at $1,255.51 an ounce, as of 0626 GMT, after hitting its lowest since mid-December at $1,253 earlier in the session. U.S. gold futures for August delivery were 0.2 percent lower at $1,257.30 per ounce.

Gold Still Under Pressure

The XAUUSD pair does not seem to be benefiting from any risks relating to rising trade tensions, but is experiencing declines as dollar grows firmer after falling steeply in last two trading sessions owing to trade war woes and any improvement in equity markets. A stronger dollar and higher U.S. interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies. Strong dollar and the prospect of a fourth rate hike have tempered Gold and Silver price in recent trading sessions.

It appears that investors are seeking safe havens in the U.S. treasuries and major safe haven currencies such as the Japanese Yen. If this situation continues we will see continuous fall in precious metal price on any dollar denominated precious metal. XAGUSD pair continues to decline slowly and is currently trading at $16.22 price handle moving down nearly 24 cents in three trading sessions.

Crude Oil has seen another bullish trigger as Trump has asked allies to stop importing crude oil from Iran by November 4, warning the other countries that failure to do so would result in imposition of sanctions on said allies. This has caused Crude Oil price to soar above $70 per barrel, WTIUSD is currently trading at $70.60 after reaching as high as $70.92 during early Asian market hours. As such, the oil market was already trending in a bullish direction, but the possible outage of 1 million bpd of supply from Iran would be pretty painful. Recognizing the dangers here, including the potential political fallout, the Trump administration is asking for more oil from major producers as it has now requested allied countries to zero out import of Crude from Iran. This along with outage of supply of Canadian Crude Oil is expected to put WTIUSD back above $70 price handle per barrel as trading session moves further this week.