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US-China Trade War Bolsters Gold & Silver, Hurts Crude Oil

May 29, 2019 at 21:50 by Vladimir Vyun

China signaled that it is ready to escalate the trade war with the United States, limiting exports of rare earth metals to the USA, which is essential to high-tech industries. Gold, being considered a safe asset, went higher. Silver followed suit. Crude oil, being considered a commodity linked to growth, reacted negatively to the news.

Crude oil will likely be affected by the US crude oil inventories report from the Energy Information Administration. Usually, the report is released on Wednesday, but it was postponed due to the Memorial Day on Monday and will be released on Thursday. Analysts predicted that it will show a decrease by 0.9 million barrels last week following the 4.7 million barrel gain the week before.

Meanwhile, Russia is carefully considering whether it should remain in the OPEC+ oil production cut agreement and whether the positive impact of the deal on oil prices outweighs the negative effect of losing the market share to US companies. Russian First Deputy Prime Minister Anton Siluanov told Reuters today:

There are many arguments both in favor of the extension and against it. Of course, we need price stability and predictability, this is good. But we see that all these deals with OPEC result in our American partners boosting shale oil output and grabbing new markets.

Futures for delivery of WTI crude oil in July slipped 0.14% to $59.06 per barrel as of 21:38 GMT on NYMEX today. Contract for Brent crude declined 0.61% to $69.68 per barrel on ICE. At the same time, August futures for gold advanced 0.16% to $1,284.5 per troy ounce, and July silver rallied 0.52% to $14.4 per ounce on COMEX.

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