Gold Edges Up On Trade War Woes but Firm Dollar Caps Gains
Gold inched up on Monday as investors looked for short-term gains using the metal’s recent narrow trading range amid increasing Sino-U.S. trade tensions and prospects of further interest rate hikes by the U.S. Federal Reserve. Gold has held a $25 range for the past few weeks and could hold that till the markets get a specific direction on rate hikes for this year in the upcoming September Fed meeting, he added.
Markets are nervously awaiting Washington’s announcement of a new round of tariffs on Chinese imports, setting the stage for possible reprisals by Beijing. As of writing this article, spot gold XAUUSD is trading at $1195.81 an ounce up 0.17% on the day, while US Gold futures GCcv1 is trading at $1200.60 an ounce down by 0.04% on the day.
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Precious Metals Could Fall Further on Trade War Woes
A look at price action of spot gold in late Asian and early European market hours suggests that the influence of the news coming out on tariffs is waning a little bit as US Greenback continues to grow strong in broad market with investors moving their funds to USD on trade war woes. We have to suspect that the dollar will regain upside momentum, especially if the trade environment takes a turn for the worst just ahead of the Fed’s month-end meeting.
Gold prices have declined about 12.6 percent from April amid intensifying global trade tensions and under pressure from rising U.S. interest rates and if the ongoing situation continues in long-term, gold and other precious metals could see even more steep fall in value. Spot Silver XAGUSD is currently trading at $14.11 up 0.38% on the day.
Global oil prices eased in early Asian trading on Monday on concerns that the United States is poised to impose additional tariffs on China, outweighing supply fears from upcoming sanctions on Iran. The market’s expectation of shortages has cooled after data from last week showed increases in supplies, while investors have lowered the outlook for oil demand.
The escalating trade row is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from upcoming U.S. sanctions on Iran over its nuclear program. Refiners in India, Iran’s second largest crude buyer will cut their monthly crude loading’s from Iran for September and October by nearly half from earlier this year. Also weighing on oil prices, U.S. drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September. Spot Crude WTIUSD is currently trading at $69.36/b up 0.30% on the day.