News

Precious Metals Soar on Stimulus Expectations

Metals

Precious metals prices rose to a multi-year high supported by a weaker dollar amid growing chances of further fiscal stimulus. Market participants are favoring non-yielding bullions such as silver and gold, in an ultra-loose monetary policy medium. Since the Covid19 outbreak, governments and central banks boosted fiscal and monetary stimulus to support the economy. Lately, the EU agreed on almost a $2 trillion stimulus package for the coming years, 750 billion euros in EU recovery fund, and 1+ trillion euros in the EU's budget till 2027. On the other hand, the US congress is negotiating the next coronavirus relief bill. The price of a gold ounce shot higher to $1865, the highest since September 2011, the price of a silver ounce jumped to $22.85, the highest since October 2013, and palladium futures advanced to a four-month high of $2237.

USD

The dollar index, which measures the greenback against a basket of major currencies, tumbled to 95.05, the lowest since early March, as investors favored riskier currencies. The rising coronavirus cases and increased chances of further stimulus in the United States to support the economic recovery weighed on the dollar. The EURUSD rose to $1.1547, the highest since January 2019, the risk-sensitive AUDUSD soared to a sixteen-month high of $0.7167, and the USDCAD tumbled to a six-week low of 1.3424.

Oil

Oil prices surrendered partials gains following a massive buildup in US weekly crude oil stocks. Oil benchmarks were up on the day supported by stimulus bets, but they backed off their highs as the American Petroleum Institute reported a rise of 7.544 million barrels in crude oil stocks. Market participants are looking forward to the official numbers by the US Energy Information Administration later today. The West Texas Intermediate September delivery fell to $41.43, and Brent Blend September delivery declined to $43.84.

Major Economic Events

GMT Country Event Expectation Previous

12:30

CA

 CPI (MoM) (Jun)

0.4%

0.3%

14:00

US

Existing Home Sales(Jun)

4.78

3.91

14:30

US

 Crude Oil Inventories

-2.098

-7.493

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