Gold is Up and Oil is Down After G20

Published on: 07/23/18 10:14 AM

Category: Uncategorised

Gold prices posted one of the largest gains in three weeks on the heals of remarks by President Donald Trump. This has taken place against the backdrop of the US Dollar taking a dive and the price of Crude Oil dropping. The Dollar went up and down all week before falling by the closing bell on Friday, July 20th.

Earlier gains in the value of the Dollar are being attributed to comments by Fed Chair Jerome Powell. After comments on CNBC by President Trump, the Dollar’s value dropped significantly. The comments stressed the President’s concern over interest rate hikes, with him declaring that he is “not thrilled,” by the prospect of such raises.

The lower price of Crude Oil is in tune with the weakening of APAC shares. The fact that Oil is dropping as Gold rises may be attributed to a sour market mood after the latest G20 Summit. The summit produced a communique that was heavy on shared concerns over potential problems but light on any solutions for those problems. This lead to a drop in bond yields, which then elevated the price of Gold even further.

The G20 meeting in Argentina may be the primary cause of such a divergence in the prices of Gold versus Crude Oil. Asian Pacific markets followed suit with the Gold and Oil trends, causing the US Dollar to drop even further. Oil prices remained weak across the region’s stock exchanges.

To summarize the mood created by G20, global markets are strong but threatened by geopolitical tensions. One prime concern is that crypto currencies are not properly regulated, and government policy makers around the world seem to have no idea how to do so. These currency types have exploded in use and popularity over the last few years, There is also a fear of protectionism and trade wars escalating, but the consensus is that these things have not caused too much instability so far.

Tracking futures on the S&P 500 and the FTSE 100 equity benchmarks point to these trends carrying over further still when the markets open up in New York and London on Monday morning. The established momentum here for Gold, the US Dollar and Oil, may continue for awhile, as the economic calendar is rather lackluster for the immediate future. There is nothing on the foreseeable horizon to act as a catalyst of change for all of these trends.