Precious Metals Edge Higher Up As Geo-Political Tensions Spiked on Multiple Fronts

Gold has benefited from general equity weakness, short covering, and rising risk aversion and there is more potential for yellow metal to see upward price action amid increasing tensions over political and economic issues across some key global countries.

Global stocks have suffered this week on worries about U.S. earnings, Italian government finances, trade tensions and mounting pressure on Saudi Arabia over the death of dissident journalist Jamal Khashoggi. Weakness in U.S. equities is expected to neutralize the safe haven appeal for U.S. dollar which would, in turn, boost demand for gold as a safe haven asset among global investors.

Gold Trades Positive As USD Lost Safe Haven Appeal

As of writing this article, Spot Gold XAUUSD is trading at $1230.97 an ounce up by 0.07% on the day while US gold futures GCcv1 are trading at $1234.60 an ounce down by 0.17% on the day. While a look at performance of major indices in Asian and European markets today indicate some level of risk appetite in markets owing to mixed performance, investor sentiment across the globe still remains cautious which has resulted in increased appetite for safe-haven instruments and while USD had been gaining high demand as safe have  instrument during any instance of geopolitical tensions in recent past, USD has failed to see the safe haven demand this time around owing to decline in equity markets and sanctions on Iran looming nearby with increase in tension surrounding Saudi Arabia escalating resulting in Yellow metal seeing an increase in demand as safe haven asset.

Meanwhile, spot Silver XAGUSD is trading at $14.75 an ounce up 0.17% on the day. The price of crude declined sharply yesterday after data from the American Petroleum Institute (API) showed an increase in a buildup in inventories. The inventories rose to 9.88 million barrels, which was higher than last week’s drawdown.

In the Asian session, the price of Brent declined to a low of $75.65. This was a continuation of the falling prices that started on October 8. Oil in New York slid more than 5% in Tuesday’s session as Saudi Arabia pledged to meet any supply shortfalls and as a risk-off sentiment spread throughout global markets. However US spot crude is trading positive in Asian hours today as concerns over supply issue owing to Iranian sanctions eased post comments from Saudi Arabia. Spot Crude WTIUSD is currently trading at $66.42/b up 0.70% on the day.