Gold prices edged higher on Tuesday, supported by hopes that the U.S. Federal Reserve could pause its rate hike cycle sooner than expected and as the dollar slipped after the previous session’s rally. Weakening U.S. dollar outlook and very dovish pivots from the Fed amid uncertainties surrounding global equity markets which are expected to decline further serve as factors that help boost demand for gold in the broad market.
The dollar index DXY, a measure of the greenback’s strength versus a group of six major peers, edged lower after rallying in the previous session as a vote on Brexit deal was postponed. Both analysts and investors continue to remain a skeptic on Fed’s plans to continue raising interest rates next year owing to macro data across key markets and US hinting at a global economic slowdown.
Safe Haven Demand Boosted Over Geo-Political Woes & Equity Rout
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar. However, the dollar still has some momentum from yesterday’s session as Dollar continues to hold the first position among safe-haven assets and risk-averse market scenario has put a steady bid in both Dollar and Gold resulting in a tug-off war for the upper hand on both sides of pair which has greatly limited profit potential of the pair.
As of writing this article, spot gold XAU/USD is currently trading at $1246.89 an ounce up by 0.19% on the day while US gold futures GCcv1 are trading at $1252.40 an ounce up by 0.24% on the day. Meanwhile, Spot Silver XAG/USD is currently trading at $14.61 an ounce up by 0.58% on the day.
Oil prices remained on shaky ground on Tuesday after sliding nearly 3% yesterday, pressured by weakness in global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply. However, the upward price action of crude oil in early Asian market was underpinned by reports of disruption in Libyan crude exports. Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, as it was seized by a local militia group over the weekend.
NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield. In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia. As of writing this article, spot US Crude WTI/USD is currently trading at $50.92 up by 0.16% on the day.
