Gold Steady Near Weekly High’s On Subdued Demand For US Greenback

Gold soars on headlines that US Fed is considering whether to signal new “wait-and-see” mentality at December meet
Colin First
Gold Friday
Gold Friday

Gold prices edged higher on early Asian market hours today and are on track for one of the best weekly performance in 2018 as US Greenback which was already subdued in broad market fell even further on renewed speculation of an imminent pause in US Central bank’s tightening cycle. Investors are now waiting for U.S. Non Farm Payroll data which is scheduled to release at 13:30 GMT for clues about the health of world’s biggest economy which could influence its monetary policy. The NFP data for November 2018 is expected to fall by 200000 jobs. US market will also see release of unemployment and wages data today. This situation (week long decline in US Greenback’s value) has led to increase in demand / implied volatility premium for gold calls compared to put data resulting in yellow metal’s jump to five month high of $1244.38 during yesterday’s trading session.

US Exports More Crude Oil Than Its Import For First Time As Production Soars Record High

Gold participants were hopeful after the Wall Street Journal reported that Federal Reserve officials were considering whether to signal a new wait-and-see mentality after a likely interest rate increase at their meeting in December. If US Fed decides to halt future rate hikes temporarily after this month’s increase in policy rate, yellow metal has high possibility to scale $1250-60 handle before end of this month. As of writing this article, spot gold XAU/USD is currently trading at $1238.55 an ounce up by 0.06% on the day while US gold futures GCcv1 is trading flat at $1243.70 per ounce. While higher interest rates make gold a costly investment owing to higher exchange rate, lower value of US Greenback helped dollar denominated bullion highly attractive and helps boost the price action in market. Meanwhile Spot Silver XAG/USD is currently trading at $14.44 an ounce down by 0.19% on the day.

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Oil prices fell on Friday, pulled down by OPEC’s move to delay a final decision on output cuts as its awaits support from heavyweight supplier Russia, which is reported to not want to reduce its output by more than 150,000 barrels per day (bpd). The Organization of the Petroleum Exporting Countries (OPEC) ended their meeting at headquarters in Vienna, Austria yesterday without announcing a decision to cut crude supply, instead preparing to debate the matter in a separate session today.  Both WTI & Brent Crude futures closed yesterday with over 2.4% decrease in value as recent data suggested that US Crude oil production has soared to record 11.7 million bpd making it the world’s biggest oil producer and also resulted in U.S.A. exporting more crude oil than its import for first time as per records which went back as far as 1973. Spot US Crude WTI/USD is currently trading at $50.91 per barrel down by 1.36% after declining over 2.22% yesterday.

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