Precious Metals Edge Down As Asian Equities Trade in Green Despite Risk Off Investor Sentiment

precious metals edged down on bullish price action in key Asian equity markets but remain in green as risk off sentiment is still prevalent in global markets.
Colin First

Gold prices eased slightly on Wednesday as the U.S. dollar was boosted by safe-haven demand as investors eyed U.S.-China tensions amid heightened risk aversion. The dollar firmed against its major peers on early Wednesday’s market hours, as investors shunned riskier assets in favor of safe-haven currencies on heightened concerns about slowing global growth and the U.S.-Sino trade war.

The dollar index was steady after it gained about 0.7% in the previous session, pulling away from a two-week trough of 96.042. The U.S. dollar increase will continue the headwinds for gold purely because gold is a dollar-denominated commodity, however, in near term, investors will start pricing in the ongoing turbulence in the equity markets so that should be supportive for gold. Recently Fed cautioned a slowdown in the global economy with most evident examples being Europe and China.

Crude Oil Edges Up As US Inventory Shows A Drop In Weekly Data

However they also mentioned that a slowdown in the global economy would result in US economic slowdown, this along with scenario where many analysts view the possibility of interest rate not rising above neutral level has put a dent on US Greenback’s long-term outlook. A slowdown in the pace of rate hikes from Fed and slow down in US economy will see US greenback moving downtrend in the broad market.

As of writing this article, Spot Gold XAUUSD is trading at $1224.66 an ounce up by 0.24% on the day, while US Gold futures GCcv1 are trading at $1224.90 an ounce up by 0.30% on the day. Investors are now keeping a close eye on the G20 leaders’ summit later this month in Argentina where U.S. President Donald Trump is expected to meet with Chinese President Xi Jinping to discuss the bilateral trade dispute as it could affect the price action of precious metals significantly. Spot silver XAGUSD is currently trading at $14.43 an ounce up by 0.80% on the day.

Oil bounced by around $1 a barrel on Wednesday to claw back some of the previous day’s 6 percent plunge, lifted by a report of an unexpected decline in U.S. commercial crude inventories and record Indian crude imports. But investors remained on edge, with the International Energy Agency (IEA) warning of unprecedented uncertainty in oil markets due to a difficult economic environment and political risk. U.S. crude oil inventories posted a drawdown of 1.545 million barrels in the week ending Friday, according to statistics released yesterday but this helped little as the previous session saw a slide of 6% in price action.

International Brent crude oil futures were at $63.60 per barrel at 0516 GMT up 1.7% from their last close, while U.S. West Texas Intermediate (WTI) crude futures were up 1.9% at $54.46 a barrel. Spot Crude WTIUSD is currently trading at $54.38 down by 2.26% on the day.

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