The Conversation (0)
Following an 11-day low, gold managed to climb as the US dollar eased. The greenback took a hit following a report that Britain and Germany are prepared to drop a key sticking point in Brexit negotiations.
The gold price climbed on Wednesday (September 5) after the US dollar rally lost momentum.
The greenback took a hit when both the pound and the euro were boosted following a report that Britain and Germany were prepared to drop a key sticking point in Brexit negotiations.
The yellow metal made the gains after experiencing an 11-day low in the previous session, and with gold still close to a one and a half year low, many insiders believe that there is little room for prices to fall.
“Gold is showing signs of bottoming,” said Carsten Menke, Julius Baer analyst.
Gold has tumbled more than 12 percent from its peak in April as the US dollar rose to 14-month highs and investors turned away from the metal.
Despite today’s slight rise in gold prices, global trade concerns continue to weaken the value of the precious metal.
“Global trade worries and the potential drag on the major economies of the world are somewhat weighing on equities markets this week,” said Jim Wycoff of Kitco News.
“However, the matter has not produced much safe-haven demand for the metals at all. Instead, metals traders appear more worried that any economic weakness from the trade disputes could mean less demand for the metals,” he added.
Adding to these concerns is the fact that the US and Canada are deadlocked on trade negotiations and there is now the possibility that US President Donald Trump will call for more trade sanctions on China.
Menke notes, “speculators will struggle to push prices much lower,” but adding that “without a weakening of the dollar, gold would find it difficult to rise.”
Wyckoff also weighed in on the issue, stating, “[s]econdary currency markets, including the Argentine peso and Turkish lira, remain under pressure against the US dollar. There are still worries this matter could turn into something more serious that impacts the global financial system.”
As of 4:18 p.m. EST, gold was up 1.42 percent, trading at US$1,196.10 per ounce.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
