Precious Metals Gain Upper Hand Over Subdued Demand For USD

Precious metals are holding up well amid subdued demand for USD as investors remains cautious owing to geo-political issues.
Colin First
Silver daily chart, November 22, 2018

Gold prices held firm on Thursday after hitting the highest in two weeks in the previous session, with improved risk appetite weighing on the U.S. dollar. Weakness in the dollar has supported investor appetite in the gold space since recent past and with limited liquidity owing to thanksgiving holidays in US markets which decreases probability for fluctuations in US Greenback should continue to support positive price action in precious metals even if increased risk appetite continues to cap gains. The dollar was broadly lower as demand for safe haven currencies declined after a rebound in global equities and the EURO strengthened on hopes for a resolution of Italy’s budget dispute.

Oil Dips As US Crude Inventories Hit New 2018 High’s

As of writing this article, Spot gold XAUUSD is currently trading at $1228.16 an ounce up by 0.17% on the day, while US Gold futures GCcv1 are trading near flat at $1228.30 an ounce up by 0.02% on the day. The dollar has been under pressure this week as cautious comments by Fed officials about a potential global slowdown raised doubts on the pace of interest rate hikes. The doubts were heightened by data on Wednesday showing weekly jobless claims rose to a more than four-month high and new orders for U.S.-made capital goods were unexpectedly flat in October. While US Greenback continues to decline across the broad market any escalation in geo-political issues will put a bid under yellow metal which is second most sought after safe haven instrument in today’s market scenario.

Spot Silver XAGUSD is currently trading near flat similar to gold at $14.50 an ounce up by 0.05% on the day. Oil prices dipped on Thursday after U.S. crude inventories increased to their highest level since December 2017 amid concerns of an emerging global glut, although an expected supply cut by producer cartel OPEC prevented further drops. U.S. commercial crude oil inventories rose by 4.9 million barrels to 446.91 million barrels last week, the Energy Information Administration (EIA) said in a weekly report yesterday which is highest level since December last year. Meanwhile fearing a glut, the Middle East-dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) is considering supply cuts when it next meets on Dec. 6, although some members, like Iran, are expected to resist any voluntary reductions. Spot US Crude WTIUSD is currently trading at $54.26 per barrel down by 0.29% on the day.

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