Precious Metals Move Downtrend on Firm US Greenback

Gold prices inched lower on Thursday as the dollar firmed amid expectations of higher U.S. interest rates, but the precious metal continued to hold above a key support level of $1,200. Spot Gold XAUUSD is trading at $1202.07 an ounce down 0.37% on the day, while US Gold futures GCcv1 were trading at $1207.70 down 0.31% on the day.

Spot gold has been trading within an $8 range over the past two sessions, with investors keenly watching the psychological $1,200 level after the metal broke below that mark and hit a 1-1/2-year low of $1,159.96 early this month. There is certainly some ambiguity following last week’s Jackson Hole symposium where Federal Reserve Chair Jerome Powell was a little bit dovish in investors’ point of view. Investors are grappling amid positive data coming through from the United States and that’s why prices are stuck just above $1,200 at the moment without any sort of clear outlook, especially around the rates for 2019.

Crude Oil Price Goes Up on Evidence of Supply Disruption

Data showing higher-than-expected annualized growth in second-quarter U.S. gross domestic product cemented expectations for a rate hike next month, with a 96 percent probability, according to Fed funds futures. Higher rates dent the appeal of non-interest-yielding precious metals, boosting the dollar in which precious metals are priced. The greenback’s strength against the Yuan was making bullion expensive for buyers in world’s biggest consumer China on Thursday as investors’ focus shifts to the trade negotiations between the United States and China and its consequences. Spot silver XAGUSD is trading at $14.62 down 0.89% on the day.

Oil prices rose on Thursday, extending gains on growing evidence of serious disruptions to crude supply from Iran and Venezuela and after a fall in U.S. crude inventories. Sanctions against Iran are beginning to impact oil supply, lifting crude prices. Iranian crude exports will likely drop to just over 2 million barrels per day (bpd) in August, versus a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.

Iraq is waiting in the wings, ready to increase its crude oil exports in anticipation of slipping Iranian oil exports waiting only on the go-ahead from OPEC and decision on same is expected to be made when OPEC members meet In December to discuss whether it can compensate for a sudden drop in Iranian supply after sanctions start in November. Spot Crude WTIUSD is trading at $70.22/b down 0.18% on the day after touching an intra-day high of $70.50/b earlier today.