Gold Trapped Inside Broad Price Band Ahead of Multiple Central Bank Rate Decisions

XAUUSD is currently trading at $1221.30 with 0.39% decrease in value and the price action indicates that the pair is trapped in short price band of $1225 to $1215 in short-term and wider price band of $1235 to $1210 in medium to long-term as outlook for US Greenback remains positive in medium term while short-term price action for USD remains dovish resulting from cautious investor stance ahead of multiple central bank rate decisions. Dollar nominated precious metals are greatly affected by strong US Greenback as metals which are non-interest investments and lose luster when bonds and US Greenback trade positive with better returns.

As of writing this article, US Gold futures for August delivery are trading at $1219.80 with 0.12% increase in value. Downside movement of US Greenback has now slowed down and USD is expected to grow stronger ahead of Fed rate decision tomorrow as the US dollar pared early losses on the yen amid guarded reaction to what was seen as only minor tweaks to the Bank of Japan’s (BOJ) ultra-easy monetary policy.

Gold Prices Under Pressure

Silver remains relatively less affected when looking at price action on a daily chart as the price of spot silver XAGUSD remains flat around $15.45 handle despite minor news based fluctuations. In short-term, spot silver is expected to be trapped within $15.40 to $15.50 price range. A major shift in US Greenback’s momentum could affect price action of silver but look at the current momentum of US Greenback and volatility expected this week, silver is expected to remain trapped in above-mentioned price range during rest of trading session for the week.

Oil prices slipped on Tuesday after a report showed that OPEC production reached a 2018 high in the month of July, although the losses were limited as concerns about supply lingered. U.S. West Texas Intermediate crude futures (WTI) were down 6 cents at $70.08, after rising more than 2 percent in the previous session. A Reuter’s survey showed the Organization of the Petroleum Exporting Countries increased production in July. OPEC hiked production by 70,000 barrels per day to 32.64 million bpd, a 2018 high. Further supply increases could offset production outages and pressure prices.

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WTI rose on Tuesday on expectations that U.S. inventories fell last week and worry that an outage at a Syncrude facility in Canada will not be solved as soon as expected. Crude inventories at the Oklahoma, delivery point for WTI has been dwindling, in part due to the Syncrude outage that has reduced the flow of oil into the hub. Oil prices have rebounded from recent lows over the last two weeks, as looming sanctions on Iran have already started to curtail exports from that country. U.S. President Donald Trump said on Monday he would meet with Iran’s President, Hassan Rouhani.