Gold Price Declines for Second Consecutive SessionGold extended falls to a one-year low on Thursday as the U.S. dollar firmed after Federal Reserve Chairman Jerome Powell asserted the need for further interest rate hikes amid a strong economy.
XAUUSD was down 0.2% at $1,223.56 an ounce at 0703 GMT. The yellow metal slipped to its lowest since July last year at $1,220.41 an ounce earlier in the session. U.S. gold futures for August delivery were 0.4 percent lower at $1,223.20 an ounce. The gold market is just following the U.S. dollar, the dollar is strong so it’s pushing the market down.
The economy is good and the interest rate is up, so that’s good for the U.S. dollar and negative for gold for the time being. The dollar held firm against its peers, supported by bullish comments from Powell, which affirmed expectations for at least two more interest rate hikes this year. Rallies continue to be well sold and it is difficult to see a break toward $1,236 – $1,240 in gold with the current dollar strength. Despite Dollar’s momentum slowing down as a result of profit booking, the price action remains on a solid bearish slide.
Gold Still Weak
At the moment, the markets seem to think that the U.S. economy is strong enough to weather the impact of trade frictions. The Chinese growth looks more vulnerable at least relatively speaking, given recent softness in Chinese data. Given an absence of hard economic data showing damage from the trade war, investors have been parking funds in U.S. assets, which have supported the dollar. Silver is also affected similar to gold, however, silver has taken to even more bearish slide when compared to Gold. XAGUSD is currently trading at $15.29 with 1.31% decrease in value and is expected
The Energy Information Administration reported a surprise major build in crude oil inventories of 5.8 million barrels for the week to July 13, after a huge draw of 12.6 million reported for the previous week that represented the largest draw since 2016. Analysts had forecast a decline of 1.9 million in crude oil inventories, and a day earlier the American Petroleum Institute reported a smaller surprise crude oil build of 629,000 barrels.
Oil prices have fallen drastically in the most recent week, after steadily climbing for the several weeks prior as the United States pressured oil buyers—particularly India–to stop buying Iranian crude completely. Oil prices began to waiver as the United States backed off its pressure, suggesting that it might be willing to offer waivers to certain countries that would allow them to continue to purchase Iranian crude oil even after sanctions take effect in November. The trade war between the United States and China and Libya’s unrest that has resulted in a force majeure have also been complicating the market. As of Writing this article, WTIUSD is trading at $68.32 per barrel.