Gold falls as dollar climbs
Gold prices continue to take the fall as dollar climbs. U.S. and China trade wars are affecting the demand for gold as investors turn to the U.S. dollar in faith that the trade dispute will take least effect on the United States. The result of this harms the Yuan as it weakens the currency. However, this is not the only abuse encountered from the dollar increasing, this also in turn makes golds more expensive for the world’s biggest consumer of gold which is China. The precious metal becoming more expensive could damage demand levels as if the world biggest consumer for the yellow gold is feeling the heat on the price then various investors with foreign currencies other than the dollar are likely to feel this pressure too. This in turn could drive demand lower.
Rate hikes are due to commence this September which is additionally, pushing investors towards the greenback. This in turn continues to make the gold prices weaker. Moreover, investors are also aware that another rate hike is believed to be scheduled for December. The strength of this rate hikes being carried out depends upon the economic data.
Oil prices increase as supply declines
Oil prices remain to be on the rise while U.S. crude inventories drop. The report being released confirms the shortage in supply and the fact that the oil market continues to tighten. Additionally, a large decline in U.S. crude inventories had been shown in data which had given incentive for the prices to rise. The data release resulted to a 0.4 percent increase pushing the price up to $79.34.
Russia being the world’s main producer of oil has warned that the global crude market is fragile. This comes from one of the main countries in the oil producing industry. It emphasises the damage the markets may take if an increase in supply is not sourced.
On top of the oil supply declining, Washington continues to place pressure on surrounding governments across the globe to cut out imports from Iran. However, a solution to supply will have to be discovered in order to keep up with demand and keep prices stabilized. Many countries which are known to purchase approximately 2 million barrels per day of Iranian oil are having to relocate to different suppliers.
However, with Iran being out of the picture Saudi Arabia and Russia may have to cover for these losses. Keeping in mind, Russia has warned the impact of sanctions on Iran. This brings about uncertainty in the markets for oil.