Precious Metals Lose Ground On Increased Risk Appetite Over Sino-U.S. Trade Deal Hope

Gold managed to retain foothold above $1280 handle but faced sharp losses as renewed risk appetite in the broad market on hopes of a positive outcome in Sino-U.S trade talks.
Colin First
Gold Friday
Gold Friday

Precious metals saw downward price action today as risk appetite returned in all major global markets following a cautious investor sentiment for four consecutive trading sessions. Majority of safe-haven demand and risk-off trading activity for the week came from European markets, but headlines from Asian market also hindered risk trading earlier this week which had helped gold and other precious metals see steady positive action. However, news hit the market during North American market hours that US officials are considering reversing tariff’s imposed on Chinese import goods in a bid to ease the impact of trade war on US economy and help close a trade deal with China. This news renewed hopes of a possible positive outcome in Sino-U.S. trade talks which is to be held at end of this month when Chinese Vice Premier Liu He is traveling to Washington for high-level trade talks between the two nations.

Crude Oil Price Shows Consolidative Action in Short Term

Given the fact that recent risk-off trading activities have provided precious metals market with significant positive price action, renewed risk on trading activity saw fund flow decrease in precious metals segment. Further profit booking activities also influenced some level of downward price action. However, buyers still remained in the market owing to weak USD in broad market as Greenback continues to suffer from the impact of partial government shutdown in US economy and Fed’s dovish stance on rate hike policy which helped bulls retain hold above $1280 handle. As of writing this article, spot gold XAUUSD is trading at $1285.39 per ounce down by 0.51% on the day while US gold futures GCcv1 were trading at $1284.50 per ounce down by 0.60% on the day. Meanwhile Silver also saw declines in spot market with XAGUSD pair down by 0.44% on the day trading at $15.45 per ounce.

Crude Oil price rebound in broad market as influence from US EIA crude oil inventory update faded away in the market. While crude oil market saw highly active week so far, there is no visible change in actual price action. The price has been on two-way action driven by news influenced momentum but support gained from OPEC crude oil production and supply cut implementation has helped prevent any sharp downside move. Given the strong support, any losses incurred from news driven momentum is shortly erased leaving the price unchanged near $50 to $53 price range per barrel. However positive high impact news or market update is required to push the price higher resulting in consolidative price action in the market. As of writing this article, Spot Crude oil WTIUSD is trading at $52.74 per barrel up by 1.07% on the day.

 

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