- Spike in Gold Liquidation
- China’s Gold Imports Shrink
- Oil Tank On Demand Uptick Concern
Gold and oil traded lower in early Wednesday trading session as a wave of negative news continued to rattle investors in the forex market. Gold has been on the back foot since the start of the week as escalating tensions between the U.S and China continue to force traders to liquidate their holdings in the precious metal
Gold under Pressure
Relations between China and the U.S have soured in recent weeks as Beijing tabled a new security law for Hong Kong. The new law is the subject of increased protests in the semi-autonomous region. President Donald Trump reiterating that he is working on a strong response to Chinas aggressiveness in Hong Kong has not gone well with the markets.
Trader’s sentiments on gold also appear to have taken a hit on reports that China’s gold imports via Hong Kong shrunk by 176% in April. Demand for gold, as a safe-haven, have also shrunk in the wake of reports that Novavax is closing in on a vaccine for the coronavirus.
On the other hand, oil prices were down in early Wednesday trading session in what appears to be a minor correction from 10-week highs. Oil futures finished higher in Tuesday trading session as traders reacted to proposed production cuts by Russia.
The organization of Petroleum Exporting Countries and its allies is in the process of slashing 9.7 million barrels a day in output. Likewise, the U.S has also seen a steep decline in oil production in recent weeks, a pickup in oil demand around the world on easing covid-19 lockdown restriction also continues to offer support to oil prices as demand for the commodity continues to edge higher.
However, oil prices were lower in Wednesday trading session amidst concerns over the rate at which demand will pick to clump glut in supply. U.S China tensions also continue to take a toll on trader’s sentiments as the world is yet to recover from the COVID-19 pandemic.