Gold looks to the UK and Italy for support
Gold took a beating last week at the hands of US rate hike expectations and unexpectedly strong data. Now, renewed dollar strength against EUR and GBP is keeping the pressure up on the yellow metal.
Head of Commodity Strategy, Saxo Bank Group
The agriculture sector was mixed with sugar and coffee attempting a recovery from a decade low. The ongoing trade dispute with China and a huge US crop kept a lid on soybeans as the price remained close to a 10-year low. Wheat’s drought premium continued to fade amid the imminent arrival of a bumper US crop and easing concerns about the winter crop conditions in both the US Plains and the Black Sea region.
The crude oil roller coaster continues with the alternating focus between supply and demand having kept the price rangebound since April. The price support has come from the short-term challenging outlook for supply due to US sanctions against Iran. Against this we have a medium- to longer-term outlook that remains troubled by the risk to demand from the current EM slowdown and rising dollar.
A three-week rally ran out of steam on Tuesday when Brent crude, despite being supported by technical buying above $78.50/barrel, once again ended up running into a brick wall of resistance ahead of $80/b.