Commodity Market: Gold edges up for a second day as markets await Trump’s press conference “on China”, US data string

Having retreated to a two-week low on Wednesday on economic recovery optimism, Gold prices edged up for a second straight day on Friday, as worsening relations between Beijing and Washington seemed to have taken hold of market sentiment, supporting demand for safe haven assets. The precious metal is also poised to register its second straight month of gains.

“Gold remains wedged between potentially positive economic developments that have been dragging prices lower, and a rise in geopolitical tensions with China over Hong Kong,” Cameron Alexander, an analyst at metals consultancy GFMS, said.

US President Donald Trump announced yesterday that he would hold a news conference “on China” later on Friday without disclosing details. Trump has vowed a strong US response to China’s national security legislation on Hong Kong, which was approved by the Chinese parliament earlier this week.

“Already, international business is facing the pressure of increased tension between the US and China, but the enactment of China’s security law for Hong Kong could take the tension to a whole new level,” Tara Joseph, president of the American Chamber of Commerce in Hong Kong, said.

Over 1,300 US firms with offices in Hong Kong provide nearly 100,000 jobs in the city.

At 9:15 GMT today Spot Gold was gaining 0.39% to trade at $1,725.53 per troy ounce, after touching an intraday high of $1,726.84, or a price level not far from Thursday highs. Meanwhile, Gold futures for delivery in June were gaining 0.23% on the day to trade at $1,717.20 per troy ounce, while Silver futures for delivery in July were up 0.67% to trade at $18.087 per troy ounce.

An environment of low interest rates, bolstered liquidity in the markets by central banks and increasing money supply tends to support the yellow metal in a longer term.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was losing 0.14% on Friday to 98.33, after touching an intraday low at 98.18, or a level not seen since March 17th (97.98).

Today market players will be also paying close attention to the US core PCE inflation report for April, due out at 12:30 GMT. Additionally, at 13:45 GMT ISM-Chicago Inc will report on manufacturing activity in the region, while at 14:00 GMT Thomson Reuters/University of Michigan will release the final data on US consumer confidence for May.

At 15:00 GMT Fed Chair Jerome Powell will participate in the Griswold Center for Economic Policy Studies Princeton Reunions Talk, an event hosted by Alan Blinder, Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University and former vice chair of the Board of Governors of the Federal Reserve System.

Meanwhile, near-term interest rate expectations were little changed. According to CME’s FedWatch Tool, as of May 29th, investors saw a 99.3% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on June 9th-10th, compared with a 98.6% probability a day ago.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,717.37
R1 – $1,728.98
R2 – $1,739.15
R3 – $1,750.76
R4 – $1,762.36

S1 – $1,707.20
S2 – $1,695.60
S3 – $1,685.42
S4 – $1,675.25

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