Gold prices rose sharply in early trading on Wednesday, largely due to a weaker dollar.
by Jörg Bernhard
In addition, falling oil prices led to easing concerns about inflation and interest rates. US President Donald Trump said there was progress in negotiations to end the war with Iran. Accordingly, Washington has presented Tehran with a comprehensive package of proposals. According to the CME Group’s FedWatch tool, the probability of interest rate increases this year has been reduced to 19 percent. The recent recovery shows that despite setbacks, purchases continue – as long as real yields (interest rates minus inflation) do not rise significantly. Further developments in the Middle East war – and especially the price of oil – are likely to continue to have a strong influence on the price of gold. Basically, there are some indications that gold has not lost its function as a crisis currency, but has simply been displaced by the strong dollar for some time.
On Wednesday morning, the price of gold rose. By 7:15 a.m. (CET), the most actively traded gold futures (April) had risen by $132.60 to $4,534.60 per troy ounce.
Crude oil: slump on hopes of a ceasefire
The price of oil fell by around four percent in midweek after the prospect of a possible ceasefire in the Middle East replaced concerns about supply shortages. Iran also said that enemy ships would not be allowed to pass through the Strait of Hormuz provided they coordinate with authorities. But even with a quick ceasefire, it could take time for production and supply chains to be fully restored. Developments in the Middle East are likely to remain the most important factor influencing oil prices in the short term, although in the USA inventories of crude oil (up 2.35 million barrels), gasoline (up 530,000 barrels) and distillates (up 1.39 million barrels) increased according to the API weekly report, which put additional pressure on prices.
On Wednesday morning, the price of oil fell. By around 7:15 a.m. (CET), the next due WTI future fell by $3.15 to $89.20, while its Brent counterpart fell by $3.70 to $96.53.
Editorial team finanzen.net
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