Commodities: Spot Price of Gold is Up, Oil Keeps Dropping
The spot price of gold increased over the weekend as it continues to strengthen its position. Gold is becoming more expensive due to several factors. There are several factors which are contributing to the rise of spot gold prices. Trade talks between the U.S. and China are far from being over. Additionally, tensions are high as after the incidents in the Persian Gulf. Relations between the U.S. and Iran increase the chance of military confrontation.
Another critical factor is the upcoming Federal Reserve meeting scheduled for June 18-19. Which also contributed to the spot gold prices to become even more prominent. This meeting will have a significant effect on the gold price.
The chances that the Fed will decide to cut the interest rate are low. The Chairman of the Federal Reserve Jerome Powell released his opinion on June 4. The central bank’s decisions would address the risks associated with the trade dispute. Expectations that the Federal Reserve will cut the interest rate decreased from 28.3% to 21.7% on Thursday.
Gold prices suppressed the results from the previous days with more than $1,350 for one ounce of gold. It means that the current rates were on the same level as in April in 2018. It is worth mentioning, as we previously reported the spot gold prices to continue to increase. Due to which, more investors are turning their attention to this precious metal.
Geopolitical tensions around the world are mounting; gold prices reflect the trends of the global economy. The gold has the opportunity to increase its rate even further for the upcoming weeks. Ole Hansen, head
of the commodity strategy at Saxo Bank, is optimistic regarding the future of gold prices. He stated that the news about the gold prices is promising.
This sentiment is shared by Michael McCarthy, who is a chief market specialist at OMC Markets. He believes that the U.S.-China trade war has the potential to increase gold prices. As without ending the disagreement, the demand for gold will drive the price for this precious metal.
Update on Oil Prices
Oil prices are decreasing as attacks on the tankers proved insufficient to have a severe effect on the oil prices. Brent fell by 0.4% to $61.76 a barrel, while U.S West Texas Intermediate (WTI) decreased by 0.4 to $52.29 a barrel.
Various reasons such as slow economic growth, trade disputes, and regional tensions forced the oil prices down. The global economy is slowing down; China’s industrial growth is at the lowest level since 2002. The current climate makes things even worse because of a trade war with the U.S. Another country with trade dispute is India, which imposed retaliatory sanctions on the U.S. goods starting from June 16.
Fortunately, the chances for military conflict in the Persian Gulf are not as high as it was during the previous week.
To sum up, spot gold prices continue to grow as they reached the highest point since 2018. Investors are keen to invest in gold as, during the times of economic and geopolitical instability, it is seen as a substantial investment. Oil prices, on the contrary, are falling as the global economy is not growing as fast as expected. China’s economic problems are accelerating, and this hurts the oil prices.
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