Gold Trades Higher as US Greenback Grows Soft

The market opened predictably quiet ahead of the abundance of risk events this week and wholly ignored President Trump going rogue at the G7 summit. U.S. Federal Reserve’s Federal Open Market Committee (FOMC) starts its two-day meeting on Tuesday, where it is anticipated to raise U.S. interest rates. The European Central Bank (ECB) and Bank of Japan’s policy meetings are also due this week. U.S. President Donald Trump arrived in Singapore on Sunday for a historic summit with North Korean leader Kim Jong Un that could lay the groundwork for ending a nuclear stand-off between the old foes and the transformation of the isolated Asian nation. Investors are currently on cautious stance looking out for any signs of an increase in Geo-political issues and if there’s a better risk aversion money will fly into gold.

Moving forward XAUUSD pair is expected to move within $1295 to $1305 during this week’s trading session. Silver had a good start to the week as it managed to breach the wider price band that controlled the pair’s momentum for the majority of last month. XAGUSD pair reached new 30 days high at $16.92 and is expected to trade in a range of $16.70 to $16.95 as silver continues to see increased activity in Asian market hours since last week.

Oil prices fell on Monday dragged down as U.S. oil drilling activity rose to its highest level since March 2015, while increasing output in Russia also weighed on the market. Analysts expect surging U.S. output to start offsetting efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold production, which has been in place since 2017 and in the first half of this year pushed up prices significantly. Prices were weighed down by another rise in the number of rigs drilling for new oil production in the United States, which crept up by one to reach its highest level since March 2015 at 862, according to energy services firm Baker Hughes on Friday. US Crude WTI continues to trade at $11 discount to international counterpart Brent crude which is currently at 76.37. That implies that U.S. crude output, which is already at a record-high of 10.8 million barrels per day (bpd), will also rise further. Non-OPEC suppliers like Russia, Brazil, Canada, and Kazakhstan are also expected increase Crude Oil output in near future and if this comes to fruition post Cartel meet scheduled later this month, the second half of 2018 will be extremely bearish for Crude Oil trading.