Gold Sees Steepest Drop in Two Weeks Despite Robust Demand – Comments from Century Financial

• Gulf Markets

The ADX General is declining slightly to 9,128.59 in Abu Dhabi in early trading. Aldar Properties PJSC contributed the most to the index decline, decreasing 0.9%. Emirates Driving Co. had the largest drop, falling 2.4%.

The DFM General Index opened slightly higher at 4,082.11 in Dubai. Emaar Properties PJSC contributed the most to the index gain, increasing 0.5%. Amlak Finance PJSC had the largest increase, rising 1.5%.
The Tadawul All Share Index opened 0.3% higher, climbing 33.38 to 11,751.55, as stocks gain for the fourth straight day in Riyadh. Riyad Bank contributed the most to the index gain, increasing 3.9%. Al Kathiri Holding Co. had the largest increase, rising 7.1%.
Oil steadied with the worst of storm Beryl over in the US for the crude hub in and around Houston, with traders looking ahead to Federal Reserve Chair Jerome Powell’s two-day testimony on monetary policy.
Brent traded below $86 a barrel after shedding almost 2% in the prior two sessions, while West Texas Intermediate was near $82. As storm Beryl continued its path through the US mainland, recovery efforts were in progress in Texas, with some infrastructure  like the Port of Houston and the Explorer Pipeline remaining offline. About 85% of Houston lost power.

• Gold

Gold declined close to 1.4% in Monday’s trading session, marking its steepest drop in two weeks. This is in stark contrast with its 3% advance last week, which marked its biggest weekly gain in three months. Monday’s drop is primarily attributable to China’s decision to not add gold to its reserves for the second straight month in June. Previously, the People’s Bank of China was on an 18-month-long gold-buying spree that was halted in May 2024. Nonetheless, overall demand for gold remains robust. According to the World Gold Council, Asian central banks have been adding more gold to their total foreign reserves compared to fiat currencies since 2021. Geopolitical risks and gold’s appreciation in recent months has fuelled this trend.

Attention shifts to Fed Chairman Jerome Powell’s semi-annual Congressional testimony on Tuesday and Wednesday. Swap traders see a 70% chance of a rate cut in September, considering last week’s mixed labour market report that sent the 2-year treasury yield down to 4.60% – the lowest level since April. Despite the political uncertainty in France, the euro recovered from initial losses to stabilize around $1.0838 on Monday. The sterling also rose to a 3.5-week high against the dollar, propelled by the Labour Party’s victory in the general elections. This caused the U.S. Dollar Index to close below its 50-moving average at 105.08, thereby bringing the 200-moving average at 104.47 in focus. A weaker greenback bodes well for the non-interest yielding bullion.

Gold is up 0.14% at $2,362.76 on Tuesday. It could encounter resistance at $2,368 – where the 9-SMA and 21-SMA merge on the 4-hour chart. The next super-trend resistance is $2,390. Meanwhile, it has 50-SMA support at $2,348. Gold prices in the UAE today are as follows:

24 Carat – AED 286.75
22 Carat – AED 265.50
21 Carat – AED 257.00
18 Carat – AED 220.25

• Crude Oil

BP to Book Up to $2 Billion Impairment: BP expects to book an impairment of up to $2 billion for the second quarter, and warned that its oil-trading earnings will take a hit of up to $700 million from lower refining margins.

Europe’s Elections Give Hope to Solar, Wind, and Nuclear Energy. Oil? Not So Much: The U.K. Labour Party has vowed to increase taxes on fossil fuel producers.

Oil ends lower as Beryl weakens and Israel-Hamas cease-fire talks ease supply worries: Oil futures settled at their lowest level in over a week on Monday as the storm in the Gulf of Mexico known as Beryl weakened, posing less of a threat to energy infrastructure in the region, and as apparent progress toward an Israel-Hamas cease-fire deal eased supply worries.

Devon Energy Nabs Williston Basin Driller in $5 Billion Deal:Devon Energy agreed to acquire Grayson Mill Energy, a oil-and-gas producer in the Williston Basin, in a cash-and-stock deal valued at $5 billion.

China Outspends the U.S. on Fusion in the Race for Energy’s Holy Grail: China wants to dominate commercial fusion, a long-dreamed-of clean energy source that is attracting new investment.

• Cryptocurrency

Cryptocurrency markets traded higher on Tuesday as investors awaited Federal Reserve Chair Jerome Powell’s testimony, hoping for supportive remarks on potential rate cuts following signs of a cooling US labor market. Powell is set to appear before Congress on Tuesday and Wednesday, with investors betting that recent soft labor market data has significantly increased the likelihood of a rate cut in September to about 80%.

Bitcoin (BTC) was trading 2.7% higher at $57,668, while Ethereum surged 2.3% to $3,071. Meanwhile, the global cryptocurrency market cap also gained by 3.8% to around $2.12 trillion in the last 24 hours.

In Monday’s trade, Bitcoin had fallen to the $55,000 level after the German government transferred 16,309 Bitcoin from its holdings to crypto exchanges and market makers. Bitcoin has recovered partially and is currently trading above $57,000. Its daily chart shows a pattern of lower highs and lower lows, with strong support around $55,000. Every dip below $56,000 is met with support and a spike in volume. Technically, BTC needs to reclaim $58,500 for a bullish sign, while ETH needs to stay above $2,875. Major support levels are at $55,500 and $54,500, while resistance levels stand at $57,650 and $58,500.

Last Updated on 5 months by News Desk 2