Precious Metals Edge Up On Dovish Comments From US Fed Chair Jerome Powell

The American dollar, gold’s biggest nemesis is now the defensive, courtesy of Powell’s dovish comments.
Colin First

Gold prices held firm on Thursday after notching up their biggest daily percentage gain in nearly two weeks in the previous session as the dollar easing on dovish comments from Federal Reserve Chair Jerome Powell. The dovish Fed stance was relatively constructive from a pure dollar trade perspective and it could edge off the dollar and continue to do so until the year-end, which is quite significant for gold prices.

The dollar slipped from a two-week high on Wednesday after Powell said interest rates are just below neutral, which signaled that the U.S. central bank is closer to the end of its rate hike cycle. A weaker greenback makes the dollar-denominated gold cheaper for other non-U.S. buyers.

Oil Price Continues to be Pressured by Risking US Inventories On Global Oversupply Concerns

This helps two major gold markets namely China & India to get into their A-game as the lower value of USD provides an opportunity to stock up high values of gold both in the virtual and physical market. However, gains in gold were being limited by increased interest in riskier assets as equity markets in the US and Asia saw positive price action following a decrease in US Treasury yields over Dovish Fed Chair’s comments. Investors expect more clues on the Fed’s monetary tightening path from the minutes of the U.S. central bank’s Nov. 7-8 meeting, due later today. As of writing this article, XAUUSD is currently trading at $1226.49 an ounce up by 0.45% on the day while US gold futures GCcv1 is trading at $1226.10 an ounce up by 0.20% on the day.

Meanwhile, Spot Silver XAGUSD is trading at $14.37 an ounce up by 0.37% on the day. Oil prices clawed back some ground from losses in the previous session, but an increase in U.S. crude inventories and uncertainty in the run to an OPEC meeting next week kept markets under pressure. WTI oil is now trading right around the $50 per barrel level, a price has last seen well over a year ago, as the current oversupply situation has now manifested itself in 10 consecutive weekly increases in U.S. oil inventories. As of writing this article, Spot US Crude Oil WTIUSD is currently trading flat at $50.20 per barrel up 0.02% on the day.

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