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Gold Trades Range-Bound in Asian Market Hours

By:
Colin First
Updated: Aug 9, 2018, 09:08 UTC

Precious metals fall as US dollar gained strength despite slight decline against Japanese Yen. Crude Oil rebounded from steep fall as the impact from latest escalation in Chinese trade war failed to affect the oil rally.

Gold

Gold prices were mostly steady in range-bound Asian trade on Thursday, after gaining for two straight sessions, with a strong dollar weighing on upside momentum. However, the downside movement of Gold was limited as US dollar loses ground to the Japanese Yen. Spot Gold XAUUSD is trading at $1211.89 down 0.15% on the day while US Gold futures GCcv1 were down 0.08% at $1220 an ounce.

The yen was broadly higher on Thursday on trade tensions and on revelations the Bank of Japan is under pressure to move away from its accommodative policy, however US Dollar stabilized in later half of Asian market hours after earlier in the session dropping to a two-week low ahead of trade talks between the United States and Japan and amid speculation over when the Bank of Japan will exit its ultra-easy monetary policy. There are no major events anywhere in the globe to give Gold a bullish trigger as such Dollar-denominated gold will see volatility purely based on USD related market news and events.

Crude Oil Rebounds Post Falling Over 3% on Chinese Trade War Woes 

It seems that people are still thinking the rate hike is going to come, so gold is out of loop among key instruments preferred by investors in near future. If there are expectations of faster rate hikes or higher inflation, then gold prices will see further downside pressure. The U.S. Federal Reserve has raised benchmark interest rates two times so far this year and targets two more hikes in the near-term with the next one slated to come in September. Higher U.S. rates tend to boost the dollar and treasury yields, adding pressure on greenback-denominated, non-yielding gold. The silver market is also seeing the impact of US dollar’s strength albeit managing to maintain range bound momentum. Spot silver XAGUSD is down 0.26% at $15.386 an ounce as of writing this article.

China’s targeting of natural gas and oil products for tariffs is a special rebuke aimed at U.S. officials who had pushed energy products as a way for China to narrow its trade gap with America. Signs that China is cutting back on oil imports weakened crude prices Wednesday but failed to derail the longer term outlook for robust U.S. energy exports.

Oil prices rebounded on Thursday after heavy losses in the previous session that came as the China-US trade dispute escalated, with official Chinese data indicating energy demand in the world’s top importer has yet to recover its strength. The U.S. is set to re-impose sanctions on Iranian oil on Nov. 4 and this move could take more than 1 million barrels of Iranian oil off global markets by the end of March. Until then, Saudi Arabia is playing a tricky game of tightrope keeping oil prices and global supplies at an equilibrium. After falling over 3% yesterday hitting the low of $65.80/b, WTIUSD is currently trading up 0.21% at $67.45/b and is expected to continue the slow upward movement for rest of today’s trading session.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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