Precious Metals On Bull Run Following Sino-U.S. Trade TruceTrump and Xi agree on 90-day trade truce to negotiate trade terms and resolve misgiving which resulted in US Greenback moving lower across the board boosting demand for precious metals that are cheap given their huge decline over past few months on Strong US Greenback.
Gold prices gained early on Monday on a weaker dollar as a trade ceasefire between the United States and China revived investor demand for riskier assets. While this is a contradictory scenario as yellow metal is widely viewed as a safe haven asset, given long-term outlook of US Greenback which paints a picture of increase in dollar’s value in broad market over days to come gold is likely to remain pressured and cost of purchasing gold when dollar’s value is high makes it an expensive investment since bullion is non-interest yielding asset.
This makes the situation highly attractive to both retail & large scale investors across the globe as stocking up on gold when its rate is low on both sides of the pair gives plenty of opportunities to make a profit in medium term since geopolitical issues across the globe are yet to be resolved.
US Crude Oil Boosted on News of Possible Production Cut in Canada’s Alberta Region
Washington and Beijing agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days. The dollar index DXY which measures the greenback against a basket of six major currencies is down nearly 0.3% making it highly attractive for investors to stock up on precious metals.
As of writing this article, spot gold XAUUSD is currently trading at $1231 an ounce up by 0.72% on the day, While US Gold futures GCcv1 is trading at $1235.20 an ounce up by 0.75% on the day. The greenback came under pressure last week after Federal Reserve Chairman Jerome Powell said interest rates are just below neutral, raising expectations that the U.S. central bank is closer to the end of its rate hike cycle which would mean USD’s Bull Run could come to end, which will also drive up price of gold in long term.
Meanwhile, Spot Silver XAGUSD is currently trading at $14.39 an ounce up by 1.53% on the day. The crude reality remains restricted to demand-supply, despite OPEC’s scheduled meet on December 6 to discuss production cuts.
Oil prices surged on Monday after the United States and China agreed to a truce in their trade war ahead of a meeting this week by producer club OPEC that is expected to cut production by more than a million barrels per day. U.S. crude prices were further pushed up by an announcement from Canada that Alberta province will force producers to cut output by 8.7 % or 325,000 barrels per day, to deal with a pipeline bottleneck that has led to crude building up in storage owing to the majority of Alberta’s oil mainly being exported to the United States. Spot US Crude WTIUSD is currently trading at $53.28 per barrel up by 5.30% on the day.