Precious Metals Move Down On Profit Booking Activity & Broad Based Demand For US Greenback

Precious metals edge down on profit booking activity following yesterday’s upsurge while broad based demand for USD as safe haven asset on increasing worries of global economic slowdown also weighed down dollar denominated precious metals.
Colin First
Gold

Gold prices dipped on Wednesday, retreating from a more than five-week top hit in the previous session, as the dollar crawled higher on safe-haven demand. Today’s move in gold prices is a correction because yesterday prices were up quite a bit. However, the downside was limited owing to increasing bearish pressure on US Greenback over U.S. Treasury Yield curve inversion amid concerns of a slowdown in US economic growth.

The benchmark 10-year Treasury yield fell to its lowest point since mid-September. The spread between the 10-year yields over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008, signaling to some investors an approaching economic slowdown in U.S. Concerns about weaker economic growth in the U.S. have stoked bets that the Federal Reserve will end its campaign to raise interest rates sooner than previously thought.

Oil Price Plunges on Worries of Global Economic Slowdown & Build in US Crude Oil Inventories

Meanwhile, other major markets such as Europe & China and emerging markets have also suffered a slowdown in economic growth owing to tariff war which went on for prolonged time frame earlier this year resulting in increased demand for safe-haven assets. While U.S. Greenback is taking most of the investor’s attention as safe haven asset a slowdown in the economy and central banks ceasing to raise interest rates will result in USD moving in a downward direction in the broad market.

This will help Gold regain its lost luster as yellow metal still remains as second most preferred safe haven asset as USD losing its position of a primary safe-haven asset will result in Gold regaining its position as is the usual norm. As of writing this article Spot Gold XAUUSD is trading at $1234.45 an ounce down by 0.33% while US Gold Futures GCcv1 is trading at $1240.60 an ounce down by 0.48% on the day.

Meanwhile, Spot Silver XAGUSD is trading at $14.42 an ounce down by 0.71% on the day. Oil prices fell by 1% percent on Wednesday, weighed down by swelling U.S. inventories and a plunge in global stock markets amid concerns over an economic slowdown. U.S. West Texas Intermediate (WTI) crude futures were at $52.61 per barrel at 0128 GMT, down 1.2% from their last close, while International Brent crude oil futures were down 0.9% at $61.52 per barrel.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said U.S. crude inventories rose by 5.4 million barrels in the week to Nov. 30, to 448 million barrels, in a sign that U.S. oil markets are in a growing glut. Official U.S. government oil production and inventory data are due later on Wednesday. A slowdown in the global economy would mean less demand for crude oil which is highly negative for crude oil price. Spot US Crude WTIUSD is currently trading at $52.48 per barrel down by 0.06% on the day.

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