Precious Metals Gain Bullish Momentum As Investors Fear Dovish Market Post Holiday SeasonGold price is supported fundamentally on its latest bull run as geo-political issues paint bearish picture for major global economies in immediate and near future.
Gold prices hit a six-month high on Wednesday as concerns over global growth and a partial government shutdown in the United States fueled risk aversion, prompting investors to seek refuge in the metal. Investors are uneasy about global economic growth and are seeking gold as a safe haven as US Greenback lost its appeal owing to mix of negative factors that have been piling upon dollar one after another in recent past.
The demand for gold is further boosted as European and Canadian markets are on holiday which has created a scenario of neutral volatility in a situation were year-end celebrations have already dragged down trading activity significantly which has caused major risk assets to lose appeal today. Precious metals are further supported as Geo-Political issues signal bearish proceedings once trading session resumes usual activity post-New Year Celebrations.
Bearish Market Sentiment amid Holiday Thin Market Boosts Safe Haven Demand
Asian stock markets retreated again earlier today extending a route that began last week as U.S. political uncertainty exacerbated worries over slowing global economic growth. In addition to concerns towards the U.S. economy, the markets are now having to grapple with growing turmoil in the White House which has raised political risk ahead of the year-end while trade wars initiated by US President Donald Trump has significantly affected major economies across the globe paving way for dovish market performance in early half of 2019 which provides solid medium to long-term support for precious metals owing to their safe haven status.
As of writing this article, Spot Gold XAUUSD is trading at $1272.12 per ounce up by 0.23% on the day after hitting an intra-day high at $1274.72 earlier today, its highest since June 20.
Meanwhile, US Gold futures GCcv1 are trading at $1275.60 per ounce up by 0.29% on the day. Spot Silver XAGUSD is trading at $14.83 per ounce up by 0.34% on the day. Oil prices trade mixed as the US WTI rebounded from steep losses in the previous session, even though concern over the health of the global economy continued to overshadow the market in the longer term. Oil has plunged more than 40% from a four-year high in October on the prospect of a supply glut. While the Organization of Petroleum Exporting Countries and its allies including Russia agreed to cut output early this month, investors are skeptical the reductions will be sufficient to dent supplies, with US producers pumping near a record.
There are several bearish factors in oil markets and the situation isn’t expected to improve anytime soon suggesting the bearish price action may continue well into early half of 2019. As of writing this article, spot crude WTIUSD is trading at $42.91 per barrel up by 0.15% on the day.