Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0779
    -0.0014 (-0.13%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2622
    0.0000 (-0.00%)
     
  • USD/JPY

    151.3680
    -0.0040 (-0.00%)
     
  • Bitcoin USD

    70,357.07
    +748.23 (+1.07%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,321.70
    +153.63 (+0.38%)
     

Precious Metals Trade Flat Amid Increased Demand For USD On Safe Haven Demand

Gold prices inched down on Monday ahead of a U.S. Federal Reserve meeting this week, pressured by a robust dollar as investors outside the United States sought the safety of the greenback amid global growth concerns. The dollar held firm below a 19-month peak on safe-haven demand following bearish equity rout on Friday over disappointing macro data from China & Europe.

Equity markets opened for the week on a cautious note after Friday’s weak economic data from key global markets added to evidence of cooling global growth and reinforced anxiety over the impact of international trade frictions on business and profits. Safe haven demand in the market is also boosted by several other factors aside from macro data such as Brexit uncertainties, French protests, and comments from ECB President Mario Draghi who told European Union leaders growth was weaker than previously forecast and urged them to go forward with reforms of the eurozone.

Geo-Political Woes Keeps Demand for Precious Metals Buoyed

As of writing this article, Spot Gold XAUUSD is trading at $1238.69 per ounce up by 0.03% on the day while gold futures GCcv1 were trading at $1242.20 per ounce up by 0.07% on the day. The downside for precious metals is limited despite visible bearish bias in the market as safe-haven demand from multiple fronts keeps demand for safe-haven assets aside from USD buoyed ahead of US FOMC update. Fed Members have in recent past reiterated that future rate hikes will be data dependent.

While the market has already priced in a rate hike for December 2018, the forecast for rate hike plans mentioned by Fed for 2019 has gone down significantly in recent days owing to disappointing macro data both in the US and other major economies. If fed pauses rate hike plans for 2019, US Greenback will turn lower against major currencies in the broad market but if fed announces that they will continue with rate hikes but intervals or number of rate hike may vary USD will retain its safe-haven demand in the broad market and continue to trade positive weighing down dollar-denominated assets significantly.

{alt}
{alt}

Investors are now cautiously awaiting updates from US FOMC statement for forwarding guidance which will greatly affect the performance of both precious metals and US Greenback in short and medium term. Spot Silver XAGUSD is currently trading at $4.61 per ounce up by 0.30% on the day. Crude oil futures were largely stable during mid-morning trade in Asia as markets digested some supply-side news emerging from the US and Oman while waiting for fresh price cues.

Baker Hughes in its weekly rig count data report released Friday showed that the number of active US oil rigs for the week ended December 14 were down four to 873. The total active U.S. rig count, which includes oil and natural-gas rigs, was also down by four at 1,071, the data showed. However, even that has failed to ease oversupply concerns as data from Oman which has agreed to cut global supply reported crude output at 2-yr high for the second consecutive month in November as per latest data release. Spot Crude WTIUSD is currently trading at $51.22 per barrel up by 0.08% on the day.

This article was originally posted on FX Empire

More From FXEMPIRE:

Advertisement