Gold Price Goes Up as US Greenback Weakens

Gold prices inched up on Wednesday on a weaker U.S. dollar and lower treasury yields, but expectations of a U.S. rate rise next week kept a lid on gains.
Colin First

Geopolitical tensions are providing (only) limited support to gold prices. A recovery in the U.S. economy could lead the central bank to have more rate hikes this year, and hence the upward momentum in gold is not that strong in medium to long term. U.S. services sector activity accelerated in May, pointing to robust economic growth in the second quarter and strengthening the case for a rise in U.S. interest rates next week. XAUUSD is a non-interest-paying asset could see demand take a hit from higher rates. However, slightly lower U.S. bond yields and a softer greenback provided support to dollar-denominated gold in short term. Treasury yields fell on Tuesday as traders piled back into lower-risk government debt after Italy’s new prime minister vowed to enact economic policies that could balloon the nation’s already-heavy debt load.

Silver continues to trade within $16 price range in the international market, however, the XAGUSD pair has breached usual range and moved near to 20 day tops at $16.58. Investors wait to see if the pair manages to breach range and move near $17 today. Crude Oil price was moving in circles on Tuesday’s trading sessions as the price moved up and down with $65 price handle.  The WTIUSD pair remained largely stable during mid-morning trade in Asia Wednesday. US crude stocks were down 2.03 million barrels for the week ended June 1, according to data released by the American Petroleum Institute on Tuesday.

Gold Hourly

The more definitive numbers on last week’s data on US crude and product inventory levels will be released by the Energy Information Administration later today. Investors are bracing themselves for another large drawdown in US Crude Stockpile today. OPEC and non-OPEC producers are mulling the possibility of easing their production cut agreement from the second half of 2018 and Oil ministers from the countries participating in the OPEC/non-OPEC pact are scheduled to meet in Vienna on June 22 to discuss same. Meanwhile, WTIUSD is expected to move range bound within $66.70 to $64.30 during today’s trading session.

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