Gold prices continue steadily to track lower inversely of the recovery in bond yields. The move appears to reflect ebbing political risk in Italy, Hong Kong, and the united kingdom in addition to hopes for progress in another round of US-China trade negotiations. Higher rates tarnish the selling point of non-interest-bearing assets, just like the yellow metal.
Meanwhile, cycle-sensitive crude oil prices took the contrary side of exactly the same narrative. Exactly the same pro-risk push across global financial markets which has weighed on gold (in addition to anti-risk currencies just like the Yen and US Dollar) appears to have driven the WTI benchmark upward alongside stocks.
GOLD MAY REBOUND AS CRUDE OIL BACKTRACKS BEFORE ECB, US CPI
A comparatively quiet day around the economic data docket offers relatively few roadblocks for established momentum, but market cheer may ebb yet as traders show restraint before Thursday’s heavy-duty event risk. The ECB rate decision and US CPI data are due.
The Eurozone monetary authority is widely likely to boost stimulus. That may ensure it is hard for President Mario Draghi and company to delivery a sentiment-boosting dovish surprise. Meanwhile, core inflation in America is likely to accelerate, which might be viewed as reducing scope Fed rate cuts.
On balance, which means that market participants may be reluctant to invest in big risk-on bets, with some which have already participated within the week-long sentiment recovery even moved to lessen exposure. This may nudge gold upward also while it pulls down on crude oil within the near term.