Precious Metals Decline as Risk Appetite Improved in Global Market

Gold and silver decline on improved risk appetite but downside limited on cautious investor sentiment.
Colin First
Gold

Precious metals saw positive price action yesterday as equities declined across the globe for the second consecutive trading session. The yellow metal hit a 3-week high during American market hours as US T-Yields hit lowest since 2017. However, risk appetite improved during Pacific-Asian market hours as headlines hinted at a change in Brexit power dynamics and US T.Yields rebound over overnight lows. Profit booking activity that followed dragged yellow metal from overnight highs. Asian market saw equities trade mixed on major stock exchanges despite dovish cues from US Wall Street.

Crude Oil Gains on Prospect of Tightening Global Supply

A rebound in the US T-Yields and positive Brexit progress were factors that favored increased risk appetite in the global market. While precious metals declined from overnight highs the downside action was limited. Investors continue to exercise caution owing to price dynamics in the global bond market and Brexit proceedings in the UK market. While price action in the bond market has improved today, major bond markets such as the UK, Germany, and the US are still seeing their government bond yields trade near recent lows. As of writing this article, spot gold XAUUSD is trading at $1313.75 per ounce down by 0.60% on the day while US Gold futures GCcv1 is trading at $1314 per ounce down by 0.65% on the day.

Meanwhile, spot Silver XAGUSD is trading at $15.44 per ounce down by 0.60% on the day. Crude oil price gained positive momentum today as a rebound in US T-Yields helped ease concerns of recession in the US. Meanwhile, improving risk appetite suggests that investors are shrugging off concerns of an economic slowdown in Asia and Europe. The production and supply cut enforced by OPEC cartel and US sanction on Iranian and Venezuelan crude oil adds strength to Crude oil bulls. Reports hint that Russia will meet its target for crude oil output reduction this week which is likely to further tighten supply and these factors help crude oil trade positive in the global market. Spot US Crude Oil is trading at $59.48 per barrel up by 1.10% on the day.

 

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