Chinese Equity Sell-Off Lifts Bullion Demand

Gold prices have rallied close to 13.00% since the start of the year, as heightened geopolitical uncertainty underpins demand. Persistent divisions among Federal Reserve policymakers over the trajectory of interest rates and monetary measures have also boosted the appeal for the non-interest-bearing asset. Tuesday’s testimony to the US Congress from Fed Chair Nominee Jerome Powell could result in a spike in bullion volatility depending on his views towards shaping policy.

Minutes from the Central Bank’s most recent monetary policy meeting showed that some officials were concerned about the inflation outlook. Also on tap this week is the Senate tax bill, which is staring at a marathon debate as Republicans hope to hold a floor vote as early as Thursday. XAUUSD hit an intra-session high of $1299.20 per troy ounce on Monday before retracing to finish above the $1294.00-mark before pulling back further overnight.

Wheat futures for December delivery fell for the third straight session to close Monday at their lowest level since August 30th, pressured in large part by lacklustre US export figures. The Department of Agriculture announced late Friday that US exporters sold 200,500 metric tonnes of wheat during the week ended November 16th, widely trailing market estimates.

Wheat prices have been sliding since the second half of the year amidst steady erosion in US share of the global market and higher production from largest global exporter Russia. US farmers planted less wheat in 2017, which analysts reckon could further worsen the outlook for exporters. December-dated wheat futures fell -1.50% to end Monday at $4.09 a bushel. Tumbling wheat prices weighed heavily on corn futures too, as a large portion of investors shifted their money out of the grain sector.