Gold Rises Above $1345 Level In Fresh Session Tops
Gold prices spiked higher in the early European Tuesday session to gain record session highs, edging towards $1350.
A couple of factors influenced the commodity’s recovery of some positive traction on Tuesday and helped to build on the rebound in the previous session from an intraday low of $1333. The US Dollar fell under some new selling pressure after the release of the Empire State Manufacturing Index and due to the underpinned commodity’s demand.
Further support of flows for the yellow metal resulted from a new instalment of downslide in US Treasury bond yields. This result reinforced expectations of the Fed to cut interest rates before the end of this year eventually.
Alongside reviving safe-haven demand and amidst fears of further swelling in trade tensions amid the two largest economies in the world and the escalating Middle East’s geopolitical tensions, this factor plays a part in boosting the precious metal and supports the favourable up-move.
The trade tensions between USA and China showed no sign of a possible decline following the Secretary of US commerce, Wilbur Ross, turning down of any potential breakthrough after his meeting with United States President Donald Trump and the Chinese counterpart ahead of the G-20 summit.
However, it remains unknown whether the bulls can capitalise on this encouraging momentum or desist from making additional aggressive bets as the market remains focused on the critical event risk of the week – the updated FOMC monetary policy. Everyone is waiting to see if there will be any cuts on the interest rates.
On the other hand, the ECB will ease the policy on rate borrowing costs, and consequently, the rate cut given that inflation won’t accelerate. This move will be one of the most significant policy reversals of ECB’s President Mario Draghi’s eight-year Tenure. So far, Euro-priced gold continues to enjoy its highest levels since April 2017. Now, the environment is continually favourable for gold to keep shining since investors remain apprehensive about global trade tensions, while central banks continue adopting a dovish stance.
Meanwhile, the US economic docket features the second-tier releases of building permits and housing starts, which form the centre of attraction as short term impetus in the current North-American session.