Gold upside rally halted in the international market amid speculative buy in the U.S. dollar. The Gold plunged from the level of US$1289.48 (Day’s high on 10th May 2019) to the present level of US$1283.07 (as on 13th May 2019, GMT-4 2:37 AM).
The factor which exerted pressure on gold prices was majorly the substantial gain in dollar prices, which rose over the speculation of the market participants, on estimation that the United States is again going to enjoy the dominance in the trade market over China given the recently escalated trade tiff between the significant economies of the globe.
However, some market participants believe that if the trade dispute is not resolved soon, it may hamper the overall global commodity markets amid weakness in Chinese Yuan due to impact of high tariff on the export from China, which in turn, could mark a less demand in China- the world’s largest primary base metal consumer.
In the recent event, the dollar prices inched up over the speculation, and Dollar Index surged from the level of 97.13 (Day’s low on 10th May 2019) to the present high of 97.35 (as on 13th May 2019, GMT-4 2:59 AM).
The rise in dollar prices exerted pressure on the cross-currency pairs and the other pairs relevant to the dollar fell, which in turn, supported the gold prices in the domestic market of falling currencies.
Australian Dollar (AUD) fell from the level of 0.7019USD per AUD (Day’s high on 10th May 2019) to the present level of 0.6974 USD per AUD (as on 13th May 2019, GMT-4 3:02 AM). The drop in the domestic currency in Australia supported the gold prices.
The Gold price in terms of Australian dollar improved, and the Australian dollar-denominated Gold Spot rose from the level of A$1829.93 (Day’s low on 10th May 2019) to the present high of A$1845.97 (as on 13th May 2019 AEST 5:08 PM).
Other than the Australian dollar, the U.S. dollar expressed its dominance over other pairs as well in the global market, especially against the domestic currency of China, with which the United States is in bilateral disagreement over the trade.
The cross-currency pair USD/CNY is ablaze over the trade war, and the U.S dollar continued gaining its leverage over the Chinese yuan. The prices of Chinese yuan against USD rose from the level of 6.7325 yuan (Day’s low on 3rd May 2019) to the present level of 6.8629 (as on 13th May 2019 GMT-4 3:25 AM).
The traction in the U.S. dollar assisted by the catalysts provided by the U.S.-China trade war to the dollar prices exerted pressure on gold prices in the United States; however, the dominant effect of the U.S. dollar against cross pairs led the gold to rise in the domestic market of falling currencies such as Australia.
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