Gold Price Declines despite Weak US GreenbackGold prices steady on Monday morning near their highest level since July 17 as the dollar eased to its lowest in nearly two weeks after U.S. President Donald Trump criticized the Federal Reserve’s interest rate tightening policy.
As the trading session progressed, the US dollar’s weakness had less impact on precious metals which resulted in Gold price seeing a steady decline across Asian market hours. Spot Gold XAUUSD is currently trading at $1228.10 with 0.10% decrease in value. U.S. gold futures for August delivery were 0.1 percent higher at $1,232.10 an ounce.
Meanwhile the dollar index, which measures the greenback against a basket of six major currencies, was down 0.2 percent at 94.305. It fell to its weakest since July 11 earlier in the session. Trump on Friday reinforced his criticism of the Federal Reserve’s policy on raising interest rates, saying it takes away from the United States’ ‘big competitive edge’ and could hurt the U.S. economy.
Over the weekend from Trump changed the environment somewhat, with the apparent push now to really weaken the U.S. dollar. The dollar has been a significant headwind for gold over the past month or so, so it opens up the possibility that we will not see that continued strength in the U.S. dollar. However, the short-term outlook remains in favor of Strong US Greenback which has resulted in precious metals losing their gains made last Friday. While Gold has significant downward movement, silver remains less affected as it has already reached multi-month lows. Spot Silver XAGUSD pair is trading flat today at $15.50 with 0.02% decrease in value.
Crude Oil is trading flat on Monday over remarks from the G20 meet in Buenos Aires. Finance ministers and central bank governors from the world’s 20 biggest economies ended the meeting over the weekend calling for more dialogue to prevent trade and geopolitical tensions from hurting growth. Economic and oil demand growth are closely correlated as expanding economies support fuel consumption for trade and travel, as well as for automobiles.
Worries over the impact of a trade war have balanced concerns over production losses and lack of supply at a time of rising demand. U.S. energy companies last week cut the number of oil rigs by the most since March following recent declines in oil prices. Drillers cut five oil rigs in the week to July 20, bringing the count down to 858, Baker Hughes energy services firm said on Friday.
The U.S. rig count, an early indicator of future output, is higher than a year ago when 764 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years. The price action stabilized on Monday as worries over production losses were outweighed by concerns that trade disputes would reduce economic growth and hit global energy demand. WTIUSD pair is currently trading at $68.29 per barrel.