Precious Metals Edge Down As Risk Appetite Increased Amid Holiday Thin Market

Precious metals edge down despite subdued demand for USD as risk appetite remains high amid holiday think market.
Colin First
Gold Friday
Gold Friday

Gold prices inched up during early Asian hours on Friday set to rise for the second straight week on safe-haven demand for the metal ahead of the G20 summit next week where the leaders of the United States and China are set to discuss their trade dispute. President Xi Jinping is due to hold talks with U.S. President Donald Trump at the G20 meeting that starts on Nov. 30 in Argentina to reconcile their trade dispute but tension between two parties continue to rise ahead of the talks as news hit market that U.S. is set to raise its tariffs to 25% on $200 billion of Chinese imports on Jan. 1 from 10% which is being levied as of today. Trump has also threatened to impose tariffs are all Chinese imports unless U.S. demands are addressed. Investors now eagerly await updates on the G20 summit as headlines surrounding same inspire high volatility giving opportunity to make short term gains. The dollar was already experiencing subdued demand as a potential global economic slowdown raised doubts about the pace of interest rate increases by the Fed next year.

Oil Continues to Decline on Oversupply Concerns

This combined with holiday think market over US thanksgiving celebrations has greatly boosted demand for yellow metal as preferred safe haven asset owing to low cost in recent times combined with weaker US Greenback providing opportunity for investors to stock up considerable quantities of precious metals. As of writing this article, Spot Gold XAUUSD is trading at $1225.55 an ounce down by 0.15% on the day trapped within weekly range but has taken to downward price action ahead of European market hours as risk appetite remains relatively high in European markets despite cautious investor’s stance owing to weak corporate earnings. Meanwhile US Gold Futures GCcv1 is trading at $1226.30 an ounce down by 0.13% on the day. Spot Silver XAGUSD is currently trading at $14.37 an ounce down by 0.81% on the day. While precious metals could see positive close for the week, the price action today will see significant downwards move as investors show signs of healthy risk appetite amid holiday think market.

Oil prices slumped to 2018 lows on Friday in thin but volatile trading, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook. Even an expectation that the Organization of the Petroleum Exporting Countries (OPEC) producer group will start withholding supply in 2019 to rein in any glut couldn’t help much in containing the decline. International benchmark Brent crude oil futures hit their lowest since December 2017 at $61.52 per barrel, before recovering to $62.10 by 0430 GMT. That was still 0.8% below their last close. U.S. West Texas Intermediate (WTI) crude futures slumped by more than 2% to $53.35 a barrel, after coming within 5 cents of an October 2017 low reached earlier in the week. The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter – in part because of reduced exports from Iran due to newly imposed U.S. sanctions. Overall, however, global oil supply has surged this year, with the top-three producers of the United States, Russia and Saudi Arabia pumping out more than a third of global consumption, which stands at around 100 million barrels per day (bpd). High production comes as the demand outlook weakens on the back of a global economic slowdown. Spot US Crude WTIUSD is currently trading at $53.18 per barrel down by 1.26% on the day.

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