Precious Metals Range Bound Ahead of Xi-Trump Trade Talks Over The Weekend

Precious metals range bound as investors cautious ahead of Sino-U.S. trade talks in sidelines of G20 summit for which President Trump has provided mixed signals in his comments.
Colin First

Gold price saw rage bound action in early Asian market hours today as U.S. President Donald Trump sent mixed signals about the prospects for a trade deal with China. Donald Trump and Chinese leader Xi Jinping are expected to discuss trade on the sidelines of the G20 summit in Argentina on Saturday, where global trade tensions are expected to dominate the agenda. Trump sent mixed signals about the trade deal yesterday saying an agreement was close but he was not sure he wanted one just as he left for Argentina for a meeting with President Xi.  Gold market is expected to closely follow G20 summit headlines as any positive development will be negative for dollar Index which took all the attention from other safe haven assets during times of crisis across the year.

Oil Price Trades Near Yearly Lows Ahead of OPEC Summit

Such a scenario is good for Yellow metal as weak USD will mean more demand for gold & other precious metals in time of demand. However if the trade spat intensifies, the stage will be set for further decline in gold prices as escalating value of US Greenback in broad market makes it difficult for investors from emerging market to invest in gold owing to high exchange rates and also see decrease in demand for China & India two of biggest markets for gold owing to increased exchange rates and increased holding and operating cost of being involved in a non interest yielding asset decreasing the allure of dollar denominated precious metals as safe haven assets. As of writing this article, spot gold XAU/USD is currently trading at $1224.27 an ounce up by 0.02% on the day while US Gold futures GCcv1 are trading at $1229.60 an ounce down by 0.06% on the day.

Meanwhile, spot silver XAG/USD is currently trading at $14.32 an ounce up by 0.04% on the day. Oil prices firmed on Friday on expectations that OPEC and Russia will agree some form of production cuts next week, although swelling U.S. supplies kept markets in check. Despite the firmer prices, crude oil has lost almost a third in value since early October and trades near yearly lows because of an emerging supply glut following a global surge in production, including from the United States, Russia and by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC). OPEC and Russia will gather on Dec. 6 and 7 in Vienna to discuss output policy and headlines indicate that the two parties are moving closer to an agreement around further production cuts ahead of official meet. Spot US Crude Oil WTI/USD is currently trading at $51.31 per barrel up by 0.33% on the day.

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