Precious Metals retain their Bullish Momentum from Previous Session Owing to Broad Based USD’s Weakness

Gold rose 1% on Wednesday, helped by a slight retreat in the dollar following a rally and as some investors covered their short positions after the metal held the key $1,200 level. As Dollar weakened following slide in US Treasury Yields and gold was near moving near monthly lows retail traders made best of the available opportunity to stack up on considerable amount of gold both in physical as well as virtual market which combined with risk off investor sentiment in market yesterday put a decent bid under spot gold. Today’s Asian market hours saw spot gold hold steady near yesterday’s highs as investor’s sentiment continues to remain cautious. However upside of spot gold was capped as optimism surrounding Sino-U.S. trade talks over headlines in Reuters that China had sent a response to U.S. demands for trade reform put a bid in Asian equity market resulting in cash flow for gold and precious metals taking a hit as Asian markets contribute to majority of fund flow and volatility in market.

Bullish Price Action in Asian Equities Put a Dent on Precious Metals Price Action

As of writing this article, Spot Gold XAUUSD is currently trading at $1214.05 an ounce up by 0.27% on the day, while US Gold futures GCcv1 are trading at $1212.50 an ounce up by 0.19% on the day. Precious metals are expected to continue trading in green today despite pick up in equities as US dollar is weaker in broad market following drop in US Treasury yields yesterday. Lower prices in precious metal market combined with broad based US Greenback’s weakness usually inspires some amount of buying activity regardless of risk sentiment in market as some investors always look for opportunity to purchase metals in small volume. Spot Silver XAGUSD is currently trading at $14.24 an ounce up by 0.74% on the day. Investors now look out for US retail sales data scheduled to release later today and a positive outcome in same could boost US Greenback across the board resulting in slowdown of precious metals momentum.

U.S. crude is plunging from nearly four-year highs six weeks ago to its lowest level since early December as market outlook has changed. Investors who were once worried about a shortage of oil, now believe that supply could outstrip demand. As a result, oil prices have plunged more than $20 a barrel since the start of October, when Brent crude rose to nearly $87 a barrel and U.S. crude traded just shy of $77. Both benchmarks are now trading firmly in bear market territory, having fallen more than 20 percent from their 52-week highs. Along the way, U.S. crude has posted its longest losing streak since it began trading in New York more than three decades ago. The contract has now fallen for 12 consecutive sessions. It settled at $55.69 on Tuesday, its lowest closing price since Nov. 16, 2017. Headlines continue to point towards weaker demand in key markets such as China, Japan and Germany according to their macro data while inventories in key oil supplying countries show an increase in stockpile. For now news of supply cut from Saudi Arabia has put a temporary lid in downward spiral of crude oil price but medium term outlook continues to look bearish for crude oil market. Spot US Crude WTIUSD is currently trading at $56.20 per barrel up by 0.27% on the day.