Commodities: Gold on the front foot with markets seeking safety as Trump-Xi meet
By Andrew Schonberg
Date: Thursday 06 Apr 2017
(ShareCast News) - Gold was on the front foot on Thursday afternoon as traders and investors liked the yellow metal's safe-haven appeal as the presidents of the US and China met in America.
At about 15:34 GMT, on Comex, gold was up 0.5% to $1254.7 an ounce. Silver rose 0.4% to $18.26 an ounce, and copper fell 0.13% to 267.65 cents a pound.
Investors were anticipating the two-day summit between Donald Trump and Xi Jinping, which kicked off in Florida on Thursday, and further on they were looking to US non-farm payrolls data due out on Friday.
Lukman Otunuga, research analyst at FXTM, said the market was imbued with a strong sense of caution as the two leaders met, the tone and the outcome of the meeting both being unknowns at this early stage.
"If Trump decides to play hardball and maintains his harsh rhetoric on China, then risk aversion may intensify consequently sending investor's rushing towards safe-haven assets," said Otunuga.
"With the Brexit negotiations, elections in Europe and Trump developments likely to create a risk-off atmosphere, Gold remains somewhat supported in the medium term," he said, also noting the hawkish US Federal Open Market Committee minutes last night.
Otunuga said that, from a technical standpoint, bulls needed to break above the stubborn $1,260 resistance for the bullish trend to continue.
Michael Hewson, chief market analyst at CMC Markets UK, said the yellow metal was continuing to butt against the 200-day MA without much in the way of success for the moment.
"Dips for now appear to be shallowing, not surprising given current uncertainty on the shape of possible next policy moves by the Fed," he said.
SwissQuote also observed that nil-yielding gold was strengthening. "The momentum seems back to bullish despite some consolidation. Resistance is located at $1263. Hourly support can be found at $1224.10," it said.
Three-month industrial metals on London Metals Exchange were up. Copper rose 2.0%, zinc firmed 1.54%, aluminum added 1.19% and tin gained 0.4%.
Meanwhile, Nymex-priced WTI crude was up 0.88% to $51.60 a barrel. Intercontinental Exchange-traded Brent was 0.83% up to $54.81 a barrel.
Hewson noted that crude oil prices had rebounded from the sharp fall from yesterday's peaks after the surprise build in US inventories caught oil bulls on the wrong side.
"US crude oil exports have continued to grow with most heading to Asia," he added
"Markets continue to bet on the prospect that the surplus of supply will finally bow to the inevitable and see the effects of the Opec production freeze deliver a re-balancing of the oil market in favour of demand over supply."
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