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Gold dives as trade war worries relieve
On Wednesday, gold edged down because the evergreen buck managed to strengthen, while trade tensions relieved.
August delivery headed south by 0.20% coming up with $1,257.40 a troy ounce on the Comex exchange.
Trade war worries relieved after news that the US government is taking a less hawkish approach to foreign investment limitations. US leader wants Congress to allow the revised Committee on Foreign Investment of the US to have domestic technology protected. However, Donald Trump is reluctant to come up with a national emergency law against China, as one senior administration official revealed.
Market participants had been on edge for the last time over worries that US leader would restrict foreign investment into American technology businesses in the latest trade feud move.
Market participants often opt for gold in times of political meltdown because the precious commodity is normally considered to be a safe haven from the negative impact of geopolitics. However, this popular precious metal has struggled in the face of the fresh political risks.
At the same time the evergreen buck managed to edge up. As a rule, gold goes up as the evergreen buck dives due to the fact this commodity is denominated in the American dollar therefore it’s very sensitive to any fluctuations in this currency.
Aside from that, the USD index, gauging the greenback’s value versus a pack of major currencies, leapt about 0.34% staying close to a year’s peak of 94.68.
Bullion gets less affordable for holders of other assets the US currency tacks on and respectively cheaper when it dips.
Apart from that silver futures tumbled 0.15% on the Comex exchange reaching $16.225 a troy ounce. As for other precious commodities, platinum futures went down 1.91% demonstrating $858.00, palladium futures dived 0.94% ending up with $945.70 an ounce. Moreover, copper futures rallied 0.18% trading at $3.021 a pound.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.