Precious Metals Decline As Demand For Safe Haven Assets Ease While USD ReboundsPrecious metals decline as demand for safe haven went down once Brexit woes eased in broad market. Further USD also rebound in broad market adding bearish pressure of greenback denominated precious metals resulting in rangebound price action.
Precious metals decline after three consecutive trading session of posting solid gains as risk appetite hold steady while Brexit woes which boosted safe-haven demand lost steam and US dollar regained strength in the broad market. A costly dollar in the broad market makes it difficult for holders of other currency to buy US Greenback denominated precious metals owing to high exchange rates. Further, risk appetite remains high in all major markets diminishing demand for safe-haven assets. These factors led to today’s subdued price action in the spot and futures market for precious metals such as gold and silver. As US Dollar rebound when risk appetite remains high gold fell below the critical support level of $1300 per ounce once again.
Crude Oil Price Supported By OPEC Production & Supply Cut Enforcement
This serves as proof for a high level of risk appetite in the global market. UK still sees one more parliament meeting today to vote on delaying the deadline for Brexit from March 29, but the market has already priced in the outcome as the probability for delaying deadline is very high owing to the current scenario which will result in a high loss for both EU & UK in case of disorderly Brexit outcome. Sino-U.S. trade talk which was one of the major factors that drove price action of precious metals in recent past has also calmed down. This leaves price action in the precious metals market to be influenced by short term impact headlines and causing the price of gold to decline back below $1300 per ounce.
As of writing this article, spot gold XAUUSD is trading at $1298 per ounce down by 0.85% on the day, while US gold futures GCcv1 is trading at $1298.10 down by 0.85% on the day. Meanwhile, spot silver XAGUSD is trading at $15.23 per ounce down by 1.38% on the day. Crude oil price hit new 2019 highs earlier today as the impact from recent supply disruption influenced by Zero export from Venezuela, US sanction on Iranian Crude oil exports and OPEC’s production and supply cut enforcement continue to underpin crude oil bulls in the broad market. Further, reports of OPEC’s decision to continue enforcing production cuts till June to rebalance price action in global market also provided some level of fundamental support. However, profit booking post price hitting 2019 highs and impact from last night’s high build in EIA weekly crude oil inventory data from US put a limit of further gains and brought the price down from intra-day highs. As of writing this article, spot crude oil WTIUSD is trading at $57.99 per barrel down by 0.45% on the day.