- S Oil Stocks Build
- Demand For Safe Haven Assets
- Gold Price Bounce Back
Gold (XAU/USD) bounced back in Wednesday trading session after plunging to two-week lows on Tuesday. On the other hand, oil continued to drop from two-month highs as U.S oil stock build continued to arouse concerns about demand recovery.
Gold Bounce Back
Gold was up 0.5% in early Wednesday trading session to highs of$1720 after initially dropping below the $1700 psychological level late on Tuesday. A drop below the $1700 level came amidst the trader’s reaction to the cooling off of coronavirus fears. Talk of a possible Coronavirus vaccine also saw traders moving away from safe-haven assets.
A bounce back in Wednesday trading session came amidst soaring tension between the U.S and China over Hong Kong. Beijing imposing a controversial security law over the semi-autonomous region appears to have rattled feathers in Washington. President Donald Trump’s warning of a strong response to Beijing’s involvement in Hong Kong affairs appears to be fuelling a strong appetite for safe-haven assets such as gold and the greenback.
Oil Prices Lower
On the other hand, oil continued to edge lower amidst growing concerns that demand is not coming online quickly to curtail an oversupply in the market. News of OPEC members cutting supply by 9.7 billion by June is already priced in, thus failing to avert a slide in prices.
U.s West Texas Intermediate WTI slipped 4.4% to lows of $31.14 a barrel as Brent crude futures slid 3.2% to $33.64 a barrel as a glut in supply oil stocks build-up continued to rattle traders.
Oil prices were down by more than 3% as traders reacted to reports that U.S Oil stocks are building up when the market is already struggling with a glut in supply. Data from U.S industry group API indicated that U.S crude stocks rose by 8.7 million barrels in the week ended May 22.