The price of crude oil declined in the American session after Donald Trump fired John Bolton, his National Security Advisor. In a tweet, Trump said that he had disagreed with most of Bolton’s positions. Bolton has long advocated for the projection of American power and called for regime changes in Iran and North Korea. He also advocated for military intervention in the two countries. Investors believe that his exit opens doors for talks with Iran, which would lead to a deal. The deal would then let Iran restart exporting crude oil. Meanwhile, inventory data from the American Petroleum Institute (API) showed that inventories declined by more than 7.2 million barrels in the past week. Today, OPEC will release its monthly report while the EIA will release its inventories data.
The gold price rose slightly after Citi released a report saying that the precious metal was likely to hit a record $2,000 within the next two years. The bank attributed this to the slow growth rate of the United States economy, which will lead to more rate cuts from the central bank. The bank also attributed this to a global downturn and strong demand from central bank. Indeed, central banks have bought gold at the fastest pace in almost ten years. For example, China has bought gold reserves worth more than $4.8 billion. The bank has gold worth more than $94 billion. The metal reached $1900 eight years ago. In recent months, there has been optimism about gold, the price of which has risen by 17% this year.
Sterling was relatively unchanged as David Frost heads to Brussels. Frost is Boris Johnson’s envoy on Brexit and will be in Brussels to try and hammer a deal. EU leaders believe that recent actions in Parliament could have led to a change of heart from Johnson. They believe that Johnson sees brokering a deal with the EU as the best option out of the current predicament. Last week, the British Parliament voted against a no-deal Brexit. They also voted to force Johnson to ask for another three-month extension from the EU. The biggest challenge on Brexit is that of the backstop, which aims to prevent the return of a hard-Irish border if there is no free trade agreement between the EU and the UK.
XBR/USD
The XBR/USD pair declined sharply after Bolton was fired. The pair dropped from a high of 63.25 to a low of 61.64. On the hourly chart, the price is slightly below the middle line of the Bollinger Bands. The accumulation/distribution indicator has soared while the current price is along the 14-day and 28-day moving averages. The pair will likely resume the upward trend since Trump is unlikely to change his stand on Iran.
EUR/USD
The EUR/USD pair was little unchanged in overnight trading. The pair is trading at 1.1050. Throughout the week, the pair has been trading between the range of 1.1015 and 1.1068. This is as investors wait for the ECB statement tomorrow. As a result, the pair’s RSI has been neutral. Today, with no major data expected from Europe, the pair will likely remain unchanged.
XAU/USD
In the past week, the XAU/USD pair has been on a downward trend. The pair has dropped from a high of 1557.08 to a low of 1484.29. The pair rose slightly in overnight trading to the current 1493. On the hourly chart, the price is along the 14-day moving averages and slightly below the 28-day moving averages. The RSI has moved from a low of 26 to the current 48. In the short term, the pair will likely continue declining.
