Gold Futures Fell To Near 7 Week Lows, Investors Weighing Supply v Demand For WTI Crude, Platinum Prices
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Summary:
- Fed policymakers are signaling yet another 75 basis point rate increase in July.
- WTI is bullish.
- Platinum Prices are at 19 month lows.
Gold Futures near 7 week lows.
Gold prices neared near 7 week lows on Friday as a strong dollar continued on its path to dampening demand for bullion, whilst a broader market sentiment in risk assets pushed investors to liquidate their gold positions to offset losses in their other holdings. Fed policymakers indicated during this week a commitment to controlling inflation even at the risk of a recession, signaling yet another 75 basis point rate increase in July. Gold is normally considered as a hedge against inflation and economic uncertainty, however higher interest rates increase the opportunity cost of holding non-yielding bullion.
Gold Aug ‘22 Futures Price Chart
Investors weigh tight supply on the backdrop of falling demand WTI Crude Oil
WTI crude oil futures dipped and bounced back during the Friday trading day as investors weighed a tightening supply on the backdrop of recession prospects and a slowing economy causing a decline in demand. Earlier this week OPEC+ agreed to stick to its output strategy, increasing production by 648,000 barrels per day in July and August, despite signs that the physical crude market remains very tight. In addition, factors added to the bullish outlook for crude include supply outages in Libya and expected shutdowns in Norway.
WTI Crude Oil Aug ‘22 Futures Price Chart
Platinum prices at 19 month lows
Platinum prices plunged amidst prospects of a weaker demand for the metal that outweighed the fear of tighter supplies. As major central banks all over the world continue to raise interest rates in an attempt to control inflation despite the possibility of a recession, in the wake of aggressive monetary policy, a slowdown in economic activity (including vehicle production) is inevitable. As the war in the Ukraine shows no signs of slowing, global platinum supplies are expected to remain subdued.
Platinum Oct ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com, fxmag.com
