Crude oil and the precious metal gold fell as investors regained confidence from news about US China tariffs. Surprisingly, both commodities fell despite traders hoping that oil prices would rise.
Mixed sentiments in the market is arguably the reason for both contrasting items’ fall this Friday’s session.
Some traders are seeing more light to the trade war agreement as both presidents planned to sign the deal’s first phase. In contrast, other investors are too cautious to believe the recent news.
The excruciating US China tariffs war has greatly damaged the Chinese and American economies. The broader market has also suffered from the row.
Ideally, crude and gold prices will have different reactions. But interestingly, it’s not the case for today as both fell.
West Texas Intermediate or WTI crude oil prices fell by 0.47% or 0.27 points in today’s trading. WTI crude barrels now sell for about $56.88, tumbling lower from its previous close of $57.15.
Meanwhile, benchmark Brent oil futures declined by 0.32% or 0.20 points this Friday. Brent oil prices are currently at $62.09 in sessions, a tad lower than its last close of $62.29.
It appears that oil traders are increasingly getting more doubtful to US China tariffs news. Prices rose first but immediately fell later during the day.
The fall was due to oil traders’ fading hopes that the United States and China will reach an agreement soon.
The pessimism also added to the gloomy sentiment over the rising crude inventories in the United States.
The trade war of the two economic powerhouses has not only slowed economic growth, but also oil demand. Such even later prompted the crude market to reduce their oil demand forecasts.
So How About Gold?
This recent week’s events in the gold and metal market are different. Gold prices just had its biggest weekly fall in two years from US China tariffs news.
Just this week, spot bullion prices went down by 3%. However, at the time of writing, gold prices reached their support earlier and are on track for a gradual recovery.
This gave oil bulls some breathing space after prices nosedived yesterday. As of the moment, the XAU USD trading pair is up by 0.14% or 2.03 points.
Spot gold prices are now at $1,469.85, slightly bouncing back from yesterday’s fall of $1,461.64.
Yesterday, a report about the People’s Bank of China was released, pushing prices to support levels. According to the report, the Chinese central bank again failed to add to its holdings last month.
For the record, China’s central bank has been consistently an accumulator of bullion since late 2018.
Silver prices also suffered this year against trade war news. Silver futures are down by 6.1% since May this year.
Gold prices held their shiny value on markets in the first half of 2019 as traders clung on to the safe-haven metal. US China tariffs war, US Fed rate cuts, and the sturdy demand from investors and major banks helped sustain prices.
However, the triple driver has turned into a triple threat as presidents Donald Trump and Xi Jinping are expected to sign the deal.