Gold Trades Positive Despite Equity Rebound Capping Safe Haven Bulls

Precious metals trade in red on equity rebound but gold is supported by broad based safe haven demand.
Colin First
Gold daily chart, December 27, 2018

Gold rose on Thursday as global growth worries and volatility in stock markets boosted demand for the safe-haven metal, but gains were capped by a sharp rebound in equities. Upbeat U.S. data and signs of easing trade tensions between Washington and Beijing also limited demand for the metal. Robust sales during the U.S. holiday shopping season indicated consumer confidence was not entirely dented by recent volatility in the U.S. stock markets, while media reports that a U.S. trade team will travel to Beijing to hold talks with Chinese officials soothed investor’s nerves.

Despite Greenback’s recovery supported by rebound in US Treasury Yields and Wall Street performance last night, it still faces bearish pressure owing to partial U.S. government shutdown, making gold cheaper for holders of other currencies.

Safe Haven Demand Underpins Gold In Broad Market

As of writing this article, Spot Gold XAU/USD is trading flat at $1267.46 per ounce up by 0.04% on the day, while US Gold Futures GCcv1 is trading at $1269.80 per ounce down by 0.36% on the day. U.S. President Donald Trump said that he is prepared to wait as long as it takes to get $5 billion from taxpayers for his U.S.-Mexico border wall, a demand that has triggered a partial shutdown of the federal government that is now in its fifth day with no immediate end in sight. SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 2.05 percent to 790.02 tonnes on Wednesday from 774.14 tonnes on Monday, indicating improved investor appetite for gold as geopolitical tensions and concerns of global economic slowdown have inspired a significant demand for the safe-haven asset.

Spot Silver XAG/USD is currently trading at $14.96 per ounce down by 0.44% on the day. Oil also caught investors’ attention after U.S. crude CLc1 and Brent LCOc1 overnight both marked their largest single-day rises since late November 2016. Oil fell on Thursday after soaring 8% in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support. Brent crude oil futures were down 8 cents, or 0.15 percent, at $54.39 a barrel by 0237 GMT. They rose 8% to $54.47 a barrel the day before. US West Texas Intermediate (WTI) crude futures fell 0.19 percent to $46.13 per barrel. They jumped 8.7 percent to $46.22 per barrel in the previous session. Both crude benchmarks are down roughly 40 percent from highs touched in October. Spot Crude WTIUSD  is currently trading at $45.35 per barrel down by 2.26% on the day.

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