Precious Metals Edge Up on Subdued US Greenback.

precious metals trade positive on subdued dollar and risk appetite in global market.
Colin First
Precious metals

Gold prices gained on Tuesday, after hitting a more than one-month high earlier in the session, as the dollar slipped after the United States and China agreed to a temporary truce in their trade conflict that rattled global markets. After the G20 summit, safe-haven buying in the dollar index has reduced therefore gold is looking very strong.

While dollar got a temporary reprieve overnight on positive macro data the positive momentum was short-lived as US Treasury yields declined with benchmark 10-year bond yields falling below psychological mark of 3%. Risk sentiment also took a hit as momentum from weekend headlines on Sino-U.S. trade truce fizzled out owing to lack of further details.

Dollar weaker on falling U.S. yields, easing trade tensions

Analysts now expect market focus to move to the U.S. Federal Reserve’s monetary policy. Markets are expecting a fourth rate hike at its Dec. 18-19 meeting.G old has fallen about 10 percent from a peak in April as investors preferred the dollar as a safe haven, with U.S.-China trade friction unfolding against a backdrop of higher U.S. interest rates greatly limiting participation from the world’s biggest market for gold on account of high exchange rate.

The precious metal is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion. They also boost the dollar, in which the metal is priced limiting the appeal of an asset to investors. As of writing this article, Spot gold XAUUSD is trading at $1236.99 an ounce up by 0.51% on the day, while US Gold futures GCcv1 were trading at $1242.70 an ounce up by 0.25% on the day.

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Meanwhile, spot silver XAGUSD is trading at $14.50 an ounce up by 0.76% on the day. Oil prices rose by more than 1% on Asian market hours, extending bigger gains from the previous day amid expected OPEC-led supply cuts and a mandated reduction in Canadian output. U.S. West Texas Intermediate (WTI) crude futures were at $53.53 per barrel at 0742 GMT up by 1.1% from their last close while International Brent crude oil futures were up by 1.1% at $62.39 per barrel.

Both crude benchmarks climbed by around 4 percent the previous session after Washington and Beijing agreed on a truce in their trade disputes and said they would negotiate for 90 days before taking any further action. As of writing this article, WTIUSD is currently trading at $53.48 per barrel up by 0.87% on the day.

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