Precious metals prices dropped, together with the demand for various safe haven assets as Brexit problems seemed to ease down. This has also led to the recovery of the US dollar in broad market, adding downward pressure on USD denominated precious metals.
Precious metals fell after three consecutive sessions of strong gains as risk appetite continued. The Brexit problems, which previously increased demand for safe haven, do not seem to affect the markets so much anymore, and the US dollar has regained its strength in the broad market.
A pricey dollar makes it difficult for other currency holders to buy precious metals in US dollars due to higher exchange rates. In addition, risk appetite remains high in all major markets, thus further reducing the demand for safe haven assets. These factors led to today’s price movements in the spot and futures markets for precious metals such as gold and silver. As the US dollar rebounded and risk appetite remained high, gold fell below the $1300 / ounce support level.
OPEC is supporting crude oil prices with decisions to reduce production and supply
This is further evidence that the risk appetite is rather high in the markets. The UK is going to hold another parliamentary meeting today to vote on the postponement of the Brexit deadline on March 29, but the markets seem to have already priced the result because the possibility of postponing the deadline is very high considering the current scenario, which will likely result in a major loss to both the EU and the UK in the case of an improper deal.
The quietness of China-US trade talks has been one of the main factors driving the price of precious metals in the recent past. This leaves the price movements of the precious metals market affected by the short-term impact news, causing the price of gold to fall below the $1,300 an ounce level.
Spot gold is trading at $1298 per ounce, down 0.85% on the day. Gold futures are trading at $1298.10, down 0.85%. Meanwhile, XAGUSD spot silver is trading at $15.23 an ounce, down 1.38% on the day.
Crude oil hit its highest level in 2019 earlier in the day as the impact of the recent supply disruption, which was caused by a failed export from Venezuela and the US sanctions on Iranian crude oil exports, led to continued support for crude oil in the broader market.
In addition, OPEC decided to continue to impose production cuts until June to rebalance the price movements in the global markets. However, the record prices which hit their highest levels in 2019 and the impact of the large gains achieved last night in the US weekly crude oil inventories, put an end to further gains and led to a drop from the record levels achieved throughout the day.
At the time of writing this article, crude oil is trading at $57.99 a barrel, down 0.45% during today’s trading session.