Gold price action saw a steady decline for the majority of the month of July’18, however, the last two weeks saw price trapped inside a short price range of $1211.30 to $1235.22. Gold is expected to remain locked inside the price band for rest of ongoing week as global forex market is tightly packed with major news release around the clock across the week.
Spot Gold XAUUSD is at $1221.10 down 0.22% an ounce as of writing this article while US Gold futures for August delivery was at $1230.30 down 0.26% an ounce. A stronger dollar makes greenback-denominated gold more expensive for holders of other currencies. Gold prices came under pressure on Wednesday as news that the Trump administration has plans to propose higher tariffs on Chinese goods stoked demand for the U.S. dollar. The dollar edged up on the Yuan and growth-leveraged currencies after a source said on Tuesday that the White House was about to propose a 25 percent tariff on $200 billion of imported Chinese goods after initially setting them at 10 percent, sparking a new round of trade hostilities in the U.S.-China tariff spat.
USD Has Become Preferred Safe Haven Instrument in Recent Times
Gold saw slight uptick action in US market hours on Tuesday when news of the change in tariff for Chinese import goods hit the market, however the same was erased in early Asian market hours as investors focus shifted to US FOMC statement and Fed interest rate decision scheduled today. Also, investment trend in recent past indicates that many investors prefer to use US Greenback as a safe-haven instrument rather than precious metals and investors flocking to US Greenback last night over tariff related news supports the theory mentioned above which would mean an escalation in trade wars could favor USD rather than dollar-denominated precious metals. Silver also mirrored Gold’s price action seeing a slight uptick in late hours of Tuesday before falling back down in early Asian market hours. As of writing this article, spot silver XAGUSD is trading at $15.34 down 0.54% an ounce and is expected to remain trapped within price band mentioned in yesterday’s article.
Crude oil futures were lower during mid-morning trade in Asia Wednesday as the market digested a surprise build in US crude stocks amid reports of rising production levels elsewhere. At 10:35 am Singapore time (0235 GMT), the new front-month October ICE Brent crude futures were down 0.38% from Tuesday’s settle at $74.21/b, while the NYMEX September light sweet crude contract was down 0.55% at $68.38/b. US crude inventories rose 5.59 million barrels in the week ended July 27 as per American Petroleum Institute data released on Tuesday. As of writing this article WTIUSD is trading at $69.04/b down 0.35% and a surprising pick-up in crude inventories based on the latest API report, at 5.6 million barrels against a 2.8 million-barrel draw-down expectation, is to be blamed for the latest drop for crude price.