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Crude Oil Retreats, Precious Metals Retain Gains

January 7, 2020 at 21:00 by Vladimir Vyun

Yesterday, crude oil logged decent gains due to escalating tensions between the United States and Iran. The countries exchanged threats, but with no real actions to back up the strong words, traders have started to hope that a large conflict can be avoided. With risk premium leaving the market, crude was unable to remain at the previous elevated levels. Now, traders wait for supply reports from the American Petroleum Institute and the Energy Information Administration. Futures for delivery of WTI crude oil in February dropped by $0.65 (1.03%) to $62.62 per barrel as of 20:46 GMT on NYMEX today. Brent crude for delivery in March slumped by $0.73 (1.06%) to $68.18 per barrel on ICE.

Precious metals managed to avoid losses despite the fact that the earlier rally was also a result of the US-Iran tensions. The most likely reason for the metals’ good performance was the low-interest-rate environment. With high interest rates, assets that do no inherently bear a yield, like precious metals, have a hard time to attract traders. But with most major central banks having low or even negative rates currently, gold and its peers have increased appeal to investors, especially those who seek safety. Futures for delivery of bullion in February gained $3.4 (0.22%) to $1,572.2 per troy ounce on COMEX today. March contract for silver jumped by $0.21 (1.13%) to $18.39 per ounce. Spot price for platinum advanced by $6.99 (0.73%) to $970.6 per ounce, and palladium soared by $23.23 (1.14%) to $2,054.82 per ounce.

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