Gold prices remained supported on Monday, as fears of a potential trade war and political uncertainty in Europe boosted demand for safe-haven assets
Gold Prices Remain Supported in Risk-Off Trade – Gold prices remained supported on Monday, as fears of a potential trade war and political uncertainty in Europe boosted demand for safe-haven assets. Risk sentiment waned after U.S. President Donald Trump announced plans on Thursday to impose tariffs of 25% on imported steel and 10% on aluminum, in a move to “protect U.S. industry”. The move sparked concerns over a potential trade war, which would have a negative impact on the U.S. economy, sending the greenback broadly lower. Gold is sensitive to moves in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion. Markets were also jittery after Italian elections on Sunday ended in a hung parliamentwith none of the country’s three main groups able to rule alone.
Crude Oil Prices Higher on Hopes for New Output Cuts – Crude oil prices were higher on Monday, supported by hopes of fresh output cuts ahead of a meeting between OPEC leaders and U.S. shale producers later in the day. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale firms were set to gather in Houston for the largest energy industry conference, CERAWeek, which begins on Monday. Rising U.S. output has weighed on oil prices in recent months amid fears it could dampen global efforts to rid the market of excess supplies. OPEC, along with some non-OPEC members led by Russia, agreed in December to extend oil output cuts until the end of 2018. The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once. Market participants were also still digesting news on Thursday that U.S. President Donald Trump plans to impose tariffs of 25% on imported steel and 10% on aluminum, in a move to “protect U.S. industry”.
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