Gold prices were stuck near 18-month lows on Tuesday morning after the U.S. dollar hit a 13-month high on Monday. Though gold often acts as a safe haven during times of political or economic unrest as we’re seeing right now with Turkey, the precious metal hasn’t enjoyed the expected breakout due to its strong connection to the dollar and the greenback’s continued strength.
The dollar was higher against the yen on Tuesday morning, trading at 110.78 as of 10:15 a.m. HK/SIN. It also gained against the euro, trading at $1.1403. The euro has been struggling in recent sessions as traders show their concern about the euro zone’s close economic relations with Turkey.
Commodity Movements
Gold was trading at $1,201.60 early on Tuesday morning, up notably from the previous session when it hit $1,191.35, a low not hit since January 2017. Oil prices, though up modestly on Tuesday morning in Asia, were troubling traders as oil tends to trade inversely to the dollar. As is the case with most dollar-linked commodities, a stronger dollar makes the commodity more expensive to the world, which usually causes prices to decrease. Nevertheless, oil prices bucked the trend, with U.S. WTI futures trading up 0.40 percent to $67.47 per barrel and Brent crude futures trading up 0.34 percent to $72.86 per barrel.
Though there are many factors that impact oil prices, analysts worry that if the dollar remains strong the bullish oil run may come to a halt. Also impacting oil prices are the new sanctions that Washington reinstated against Tehran last week, and the upcoming November sanctions that are looming overhead. Prior sanctions against Iran removed nearly 2.4 million barrels of oil from the market, though analysts expect the current sanctions to be much less aggressive. The International Energy Agency warned on Friday that the energy market could become “far less calm” once the sanctions are in effect.
This article was sponsored by FXOpen.