- Weakening Dollar on Coronavirus Vaccine Talk
- Shrinking China Gold Import
- Spiking Oil Demand and Production Cuts
Gold (XAU) remains under pressure at seven-year highs with prices edging lower in early Tuesday trading session. Oil prices, on the other hand, continue to tick higher as traders react to production cuts by Russia amidst an uptick in demand.
Gold Prices Under Pressure
A falling dollar could do little as gold futures dropped 0.06% in early Tuesday trading session. The slump came as traders reacted to reports over Novavax’s Covid-19 vaccine. The biotechnology company is poised to report the results of a phase one clinical trial in July.
Reports of a potential Coronavirus vaccine or treatment continue to reduce risk sentiment in the market upon which gold prices have rallied to seven-year highs.
A confirmation that China’s gold imports via Hong Kong shrunk by about 176% to 10.3 tones in April also continues to take a toll on gold prices. Gold prices also remain under pressure on reports of a potential Japan stimulus package that continues to fuel demand for equities rather than the precious metal as risk appetite reduces.
Surging Oil Prices
Oil prices, on the other hand, were up in Tuesday trading session as traders reacted to a spike in demand on easing lockdown restrictions around the world. Brent futures were up by 1.58% to $36.09 a barrel. The spike came as the Russian Energy Minister reiterated that rising fuel demand could trim current oversupply by 12 million barrels per day over the next two months. In addition, Russia is close to approving an 8.5 million barrel per day supply cut as part of a pledge made in April.
Production cut amidst a spike in demand is one of the catalysts expected to support oil prices that are closing in on the $40 a barrel level after plunging to record lows in March. Chines demand for oil has already rebounded to 89% of January levels, prior to the COVID 19 Pandemic.