Fed supports the Greenback

Daily Analysis - 21/05/2019

Gold eases as dollar steals investor’s save-heaven demand

On Tuesday Gold weakened following a touch of a more than 14-day low in the last session. In the meantime growing speculations that the U.S. Federal Reserve has no intention to lower the interest rates for 2019 supported the greenback which seized gold's safe-haven demand. The dollar stayed near a 20-day top on Tuesday, boosted by higher U.S. yields and as escalating trade conflicts between the United States and China increased the desire for the safe-haven greenback.

U.S. gold futures slid about 0.2% to $1,275.19 an ounce while Spot gold dropped 0.2% to $1,275.60 per ounce. The last session, gold dropped to a more than 14-day trough of $1,273.21.

Oil prices edged up

On Tuesday Oil went up due to increasing frictions between the United States and Iran and on indications that OPEC will extend the withholding of supply this year.

Still, profits were reduced by anxieties that a lengthy China-U.S. trade conflict may begin global economic retardation. U.S. West Texas Intermediate (WTI) went up by 12 cents and reached the level of $63.20 per barrel. Brent crude futures went up 6 cents, to $72.02 per barrel.

Asian Stocks were mostly higher

In Tuesday Asian stocks were mostly recovered while a short postponement in U.S.-China trade anxieties presented some relief.

The Nikkei 225 in Japan were broadly even replacing an earlier fall, as shares of index Fanuc grew. The Topix index, however, continued in the negative area as it traded down by more than 0.10%.

Over in South Korea, the Kospi increased to near 0.9% while shares of Samsung Electronics rose more than 4% following an earlier report of Google suspending any business action with Huawei.

Greenback near 14-day top

On Tuesday the popular greenback was even reaching a 20-day top, boosted by leading U.S. yields and its safe-haven nature.

The dollar index versus a box of six important currencies was slightly above at 97.964. The general manager at Gaitame.Com Takuya Kanda said

“The dollar has established itself as a safe-haven and it attracts demand in times like this, with equities falling and market volatility rising,” “The bounce by Treasury yields is another factor supporting the dollar. The recent drop by the 10-year yield seemed overdone, and with Fed’s Powell not providing clear hints of a rate cut this year, the rebound in yields could continue for a while.”

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