Gold prices edged up on Thursday, snapping two sessions of declines amid worries over the intensifying trade war between the United States and China.
XAUUSD was up 0.2% at $1,244 an ounce at 0650 GMT. In the previous session, it slipped 1% to hit its lowest in over a week at $1,240.89. U.S. gold futures for August delivery were little changed at $1,244 an ounce. Trump is serious with respect to trade tariffs on China. Once again, the counter-reaction from China is expected and these situations could escalate the tensions further. Meanwhile, the dollar rose to a six-month high against the yen and steadied against other major peers on Thursday after U.S. inflation data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year. The further escalation of the trade war is mutually destructive given the higher U.S. consumer prices as a result of import tariffs, which in turn could fuel the risk of a faster-than-expected Fed rate hike in the foreseeable horizon.
Also, the first day of NATO meeting saw US President Trump initiating argument over Germany’s energy trade with Russia and Allied countries being blamed on regard their financial contribution. Continuous antagonistic attitude from President Trump could cause new geopolitical concerns which caused investment activity surrounding precious metals to increase slightly. While silver is trading above yesterday’s lows the XAGUSD pair as moved below $ 16 mark albeit in $15.90 handle as momentum was spurred due to geopolitical events and if price action continues as per current trend the pair could close for the week between $15.85 to $16.25 price ranges.
Yesterday, news that Libya would reopen four export terminals in its eastern oil production heartland – and hence start ramping up oil supply – sent the price of Brent crude crashing nearly 7 percent. The war-torn country boasting the largest proven reserves of oil in Africa was forced to suspend exports from these ports after a showdown between its rival authorities, which had dampened its oil output considerably. But the relief did not last long.
The price of Brent, the international benchmark, is again climbing up. In fact, according to Reuters, it has already gained 1.8% to as of this morning, coming closer to $75 a barrel. Meanwhile, although the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to finally boost production by a million barrels daily – thereby bringing down prices flirting with the $80 a barrel mark – the cartel’s president, UAE’s energy minister Suhail al-Mazrouei recently told Bloomberg that they have no intention of “overdoing” things to offset the various supply disruptions around the world.
WTIUSD pair is currently trading at $70.98 per barrel as U.S. crude oil exports to India hit a record in June and so far this year are almost double last year’s total as the Asian nation’s refiners move to replace supplies from Iran and Venezuela in a win for the Trump administration.
This article was originally posted on FX Empire
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