Gold and crude oil prices weakened on Thursday, generally following a deterioration in risk appetite as the USD rallied. Gold is steady near US$ 1,760 after dipping overnight.
The S&P 500 weakened, but a rally into the close meant that losses were limited to about 0.3% for the day. Still, that was not enough to offer the same for Gold and WTI, which closed Thursday about 0.7% and 3.8% lower, respectively.
The deterioration in sentiment occurred as the United Kingdom outlined fiscal austerity. Jeremy Hunt, the chancellor of the Exchequer, announced a USD 65 billion packages of tax hikes and spending reductions to tackle inflation. Then, US initial jobless claims surprised lower, further underscoring the Federal Reserve’s tightening process.
Treasury yields and the USD rallied, pressuring anti-fiat gold prices. The stronger Greenback and demand-side implications from the UK fiscal budget also pressured crude oil.
Crude oil had an uptick in Asia today after sliding around 5% yesterday. The WTI futures contract is near US$ 82.50 bbl, while the Brent contract is around US$ 90.50 bbl at the time of going to print.
Economic event risk notably dies down heading into the weekend. US existing home sales for October will cross the wires. Surging mortgage rates have been working to slow the housing market and sales. Given that the labor market remains tight, slowing sales is most likely a function of affordability issues for the time being. As such, gold and crude oil might continue focusing on general risk appetite and brush aside the data.
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