Precious Metals Gain As Major Central Banks Join Bear Cartel

Precious metals rebound as dovish cues from central bank hurts investor sentiment.
Colin First

Precious metals today saw solid gains in all major markets across Asia and Europe as concerns of economic slowdown grips investor sentiment in the broad market. This week saw equities in all major global markets slide sharply and forex markets trade rangebound with a bearish bias as the rout in equity market hurt investor sentiment and risk appetite in the market. Further, some of the key central banks – Australia, China, Canada & Europe take on dovish tone resulting in any lingering positive investor sentiment at the start of the week getting erased as the trading session came to close for the week. The most recent central bank update – yesterday’s ECB session saw a highly dovish statement with announcements for reinitiating Quantitative Easing program despite the last one closing just last December.

Speculative Momentum Leads to Rangebound Action in Crude Oil Market

Similarly, the Chinese central bank reduced the growth target for 2019 to lowest in nearly 30 years. Such drastic changes in central banks approach have caused investors across the globe to be concerned of economic slowdown despite hopes for a trade deal between China & U.S.A. The dovish influence stemming from dovish central bank sentiment and equities seeing sharp decline has finally given precious metal bulls a solid boost needed to regain momentum in global markets. As of writing this article, spot gold XAUUSD is trading at $1292.76 per ounce up by 0.55% on the day, while US gold futures GCcv1 were trading at $1293.10 per ounce up by 0.54% on the day. Similarly, spot silver XAGUSD is trading at $15.10 per ounce up by 0.56% on the day.

The price action in crude oil market saw dovish move once again today as speculation continues to price action. As explained in my analysis yesterday there are no major events scheduled this week or macro data updates with a strong presence in the market enough to disrupt the supply. To the upside, data from US inventories which hint at record high production, output and increased stockpile data limits sharp gains while to the downside production and supply cut enforced by OPEC and US sanctions on Venezuelan and Iranian crude oil exports limit loss. This has led to the price action of crude oil being influenced by investors interpretation of headlines and comments coming from crude oil producing nations which turn out to be nothing more than speculation resulting in rangebound price action across the week. As of writing this article, spot crude oil WTIUSD is trading at $55.44 per barrel down by 1.74% on the day.

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