Precious Metals Subdued on Increased Risk Appetite in Broad Market

Precious metals see slight downtrend price action over renewed risk appetite but broad-based USD weakness helped limit downside price action.
Colin First
Comex Gold

Precious metals trade range bound with slight bearish bias today as risk appetite returned to the market. However weaker US Greenback in the broad market helped limit sharp declines. Following an announcement from the Chinese government that they plan to increase fiscal spending to boost the economy, risk appetite slowly returned to market offsetting the influence of IMF growth forecast from earlier this week. However safe-haven demand still remains relatively higher in the broad market as investors continue to exercise caution ahead of today’s key events – European Central Bank’s monetary policy committee meeting and Senate meeting in the U.S. where members are expected to vote on reopening government.

US Crude Oil Stockpile Data Continues To Hinder Broad Market Oil Price Action

Further renewed risk appetite has weakened US Dollar in the broad market which was already pressured by partial shutdown in US government and dovish fed rate hike stance has helped precious metals see some demand from emerging markets. Weak USD is always positive for dollar-denominated precious metals as lower exchange rates facilitate increased demand in the physical market and boost online activity owing to a low exchange rate for investors from emerging markets. As of writing this article, spot gold XAUUSD is trading at $1279.53 per ounce down by 0.25% on the day, while US gold futures GCcv1 were trading at $1278.80 per ounce down by 0.40% on the day. Meanwhile, spot silver XAGUSD is trading at $15.30 per ounce down by 0.42% on the day.

Crude oil saw two-way price action today as the report of an increase in US weekly API crude oil stockpile data boosted bearish influence in the market as investors sentiment is still tainted with worries of global economic growth which could possibly limit fuel demand in the broad market. However, OPEC’s production cut and influence of Chinese headlines which hinted at increased spending continues to limit downside move and provide a positive influence in the broad market which has since helped both stock and futures market to see bullish rebound in price action. As of writing this article US spot crude oil WTIUSD is trading at $52.48 per barrel up by 0.75% on the day, however further downside move is still not ruled out as EIA crude oil inventory data from the U.S. is yet to hit the market and increased stockpile data is likely to inspire downside move.

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