Gold Bars and Dollar

Gold Underpinned by Safe Haven Demand, Lower Treasury Yields

Dollar-denominated commodities like copper and gold finished lower on Friday, but a steep sell-off in crude oil grabbed most of the headlines. While the metals may have been influenced by a stronger U.S. Dollar and some light safe-haven buying, crude oil was pressured by expectations of increased OPEC-led production in June.

Comex High Grade Copper – Supported by Possible Supply Deficit

Copper finished lower on Friday, but still managed to post a small gain for the week. Despite the dollar’s eight week rally, copper has remained relatively firm, but choppy. The mostly sideways-to-higher trade last week was fueled by thoughts of increasing demand and a possible supply deficit before the end of the year.

July Comex High Grade Copper settled on Friday at $3.0775, down 0.0185 or -0.60%.

Comex High Grade Copper
Daily July Comex High Grade Copper

A brief drop in the U.S. Dollar and renewed geopolitical concerns over U.S.-China trade relations on Tuesday helped drive copper to its highest level since April 26. President Trump’s disappointment in the outcome of the trade talks was the catalyst behind the selling pressure.

Prices stabilized later in the week when demand for the U.S. Dollar softened after the Fed released dovish minutes from its last meeting in early May.

Comex Gold – Supported by Drop in Treasury Yields, Safe Haven Demand

Gold prices inched lower on Friday, but still managed to close above the psychological $1300 level while holding on to its gains for the week.

August Comex Gold futures settled at $1309.00, down $0.80 or -0.06%.

Comex Gold
Daily August Comex Gold

Gold was supported by a drop in U.S. Treasury yields related to the dovish Fed minutes. The Federal Reserve’s May meeting minutes released on Wednesday showed the central bank may be willing to let inflation run a little hotter than its two percent mandate.

Gold was also bolstered by increased safe haven demand after President Trump cancelled a pivotal meeting with North Korean Kim Jong Un.

Crude Oil – Talk of Easing Production Limits Triggers Price Plunge

U.S. West Texas Intermediate crude oil futures settled over 4 percent lower on Friday after Russian Energy Minister Alexander Novak said a group of producer nations could soon begin easing production limits aimed at balancing the market.

July WTI Crude Oil settled at $67.88, down $2.83 or -4.17%.

WTI Crude Oil
Daily July WTI Crude Oil

“The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts,” Novak said in televised comments, according to Reuters.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.