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Precious Metals Trade Range Bound as US Dollar Inches Up in Broad Market

By:
Colin First
Published: Nov 2, 2018, 08:17 UTC

Precious metals trade range bound near over night highs as dollar inches up post its decline on hitting 16-month highs and a recovery of risk appetite for riskier assets among global investors.

Precious Metals Trade Range Bound as US Dollar Inches Up in Broad Market

Gold prices on Friday held on to gains from the previous session as investors remained cautious ahead of a U.S. jobs report, which could provide clues on the pace of further interest rate hikes. Investors are being a little cautious ahead of the jobs data today which has resulted in spot gold trading in range bound price action near overnight gains. In the wider markets, the dollar steadied on Friday after pulling back from 16-month highs in the previous session as investors moved back into riskier assets albeit prevalent cautious mood. As of writing this article, Spot Gold XAUUSD is currently trading near flat at $1233.99 an ounce up 0.07% on the day, while US Gold futures GCcv1 is trading at $1235 an ounce down by 0.29% on the day. Analysts believe that spot gold may retrace to a support at $1,224 per ounce in short term as it failed to break resistance at $1237 handle despite recent bullish triggers.

Surge in Crude Oil Output From Major Producers Offset Woes from US Sanctions on Iranian Crude Oil

Asian shares jumped after the U.S. and Chinese presidents expressed optimism about resolving their bruising trade war, ahead of a high-stakes meeting planned at the end of November in Argentina. A positive equity market performance indicates high level of risk appetite among global investors which could cap gains in spot market for yellow metal as gold is considered a safe haven asset and US dollar in which the yellow metal is denominated seems to have edged up slightly post its decline yesterday. Investors now await US NFP data that is scheduled to release during north American market hours and a better than expected reading could put a dent in demand for precious metals and see gold close for the week in red. Spot Silver XAGUSD is trading in a range bound fashion near overnight gains similar to yellow metal and as of writing this article, the pair is trading at $14.75 an ounce up by 0.13% on the day.

Oil prices fell on Friday as surging output by the world’s three largest producers outweighed supply concerns from the start of U.S. sanctions next week against Iran’s petroleum exports. Front-month Brent crude futures were at $72.60 per barrel at 0441 GMT on Friday, down 0.4% from their last close. While U.S. West Texas Intermediate (WTI) crude futures were down 0.4% at $63.45 a barrel. Analysts believe that the surge in output has resulted in Contango scenario which implies that prices for future delivery are higher than for immediate dispatch resulting in traders stocking up on oil for later sale in trading market. However they also believe that spreads are still insufficient to encourage physical storage. The price of Spot US Crude oil WTIUSD hit a six week low yesterday at $63.07 but has since rebound and is currently trading near flat with bearish bias at $63.39 per barrel down by 0.05% on the day.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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