Gold Loses Ground on Strong USD Owing to Positive U.S. Macro Data

Trade war updates to remain main driving force of precious metals as dollar price action is greatly affected by public sentiment resulting from trade war updates.
Colin First
Gold Rises upon Market Uncertainty
Gold Rises upon Market Uncertainty

Gold fell for a second straight session on Monday as expectations of an interest rate hike by the U.S. Federal Reserve in September and fears of an escalation in U.S.-China trade tensions kept the dollar firm. US Dollar on Friday gained additional bullish support as Employment data was better than expected and wages data saw significant increase which resulted in US Treasury yields seeing a spike resulting in positive momentum for US Dollar in broad market. As of writing this article, Spot Gold XAUUSD is currently trading at $1195.51 down 0.04% on the day while US Gold futures GCcv1 is trading flat at $1200.50 up 0.008% on the day. While gold investors had priced in some downside movement owing to positive expectations for US macro updates, the outcome had significantly higher impact on market as the readings were far better than expected essentially putting a stop to temporary momentum gained by precious metals last week.

Trade War Woes To Influence Yellow Metal’s Momentum in Near Future Trading Sessions

Moving forward EM currency crisis and Sino-U.S trade war proceedings are expected to remain in focus as investors await updates on tariff with Trump commenting last week that he is planning tariff for additional $200btotaling upto nearly $500b worth of goods if implemented. USD continues to gain momentum as investors keep flooding greenback with funds as they await update on implementing the $200b worth of tariff’s announced earlier. Precious metals are expected to continue downtrend movement as long as Dollar remains strong but the main question that prevails among investors and analysts alike is “How long will US markets be capable of weathering the impact of the trade war as retaliatory tariffs will negatively impact US exports as well”. Meanwhile Spot Silver XAGUSD is trading at $14.21 up 0.29% on the day.

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Crude oil futures were higher during mid-morning trade in Asia Monday amid higher US oil rig count data and continuing focus on looming US sanctions on Iranian crude. The US oil rig count fell by two to 860 last week as operations in the country’s most active play, Permian Basin, continued to slow as takeaway capacity approached its limit, weekly data released by Baker Hughes showed Friday. Market attention also remained on the impact of Iranian crude flows ahead of US sanctions snapping back in November, particularly on the two largest importers of Iranian crude, China and India. China’s Iranian crude imports hit a monthly record 874,000 b/d in August, S&P Global Platts trade flow. However China is expected to remain the biggest buyer of Iranian crude as Beijing has said business with Iran will run as normal despite US sanctions. Meanwhile South Korea has become the first of Iran’s top-three oil customers to fulfill a hard-line U.S. demand that buyers cut imports to zero. Spot Crude WTIUSD is currently trading at $68..6/b up 0.72% on the day.

 

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