Precious Metals Move Down as Dollar Grows Stronger With Rise in Treasury Yields

Precious metals are trading with a dovish sentiment as the Dollar gained strength in the latter half of Monday’s trading session. Spot Gold XAUUSD is currently trading at $1219.62.
Colin First
Gold and Silver

US Gold Futures for August’18 delivery is at $1219.50 with 0.49% decrease in value.  The dollar index DXY which measures the greenback against a basket of six major currencies is currently at 94.44 after it hit a one-year high of 95.652 last week. The dollar ticked up slightly on Tuesday, adding to gains made in overnight trade after U.S. Treasury yields rose on expectations the Federal Reserve would persist with its rate hikes this year.

A jump in benchmark 10-year U.S. Treasury yields to a five-week high had provided support to the dollar in U.S. trade on Monday. The surge in yields came despite criticism from President Donald Trump about the impact of the strength of the greenback and Federal Reserve interest rate rises on the economy. U.S. economy is in a very healthy state overall.

Gold and Silver Under Pressure

Silver saw a slight decline in early Asian market hours but has recovered what little value was lost, XAGUSD is currently trading at $15.41 with 0.19% increase in value. Silver is expected to remain well within $15 price handle across the week as US Greenback is expected to continue growing stronger in near future. Oil prices extended losses on Tuesday as attention shifted to the risk of oversupply, with market participants shrugging off escalating tensions between the United States and Iran.

Gold Hourly

Brent crude oil was down 0.14% at $72.96 a barrel by 0037 GMT while U.S. crude was down 0.13% at $67.80 a barrel. Earlier in Monday’s session, the market had risen after President Donald Trump warned of dire consequences for Iran if it threatened the United States. Saudi Arabia and large producers are ramping up output to offset losses that are likely to come as a November deadline approaches for other countries to comply with U.S. sanctions on crude sales from Iran. Meanwhile India’s oil minister yesterday mentioned that Iran was the second-biggest oil supplier to Indian state refiners between April and June, replacing Saudi Arabia as companies took advantage of steeper discounts offered by Tehran. The fall in both oil and gold prices overnight is a testament that investors are likely focused on oversupply risks rather than on geopolitical risks which are traditionally short-lived in nature.

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