On Tuesday, the Australian dollar surged against its U.S. counterpart as demand for the latter was pressured ahead of the Federal
Reserve's highly-anticipated policy statement on Wednesday, which also sent the metals sector higher.
AUD/USD hit 0.7327 during late Asian trade, the session high; the pair subsequently consolidated at 0.7317, higher 0.70%.
In the commodities sector, crude oil prices hit another four-month low Monday, partly on the China worries and amid a glut of oil on the world market. The Asian nation is the world’s largest raw commodity importer.
On Tuesday, crude oil for September delivery was down 0.52% or 0.24 to $47.15 a barrel. Brent oil for delivery in September fell 0.88% or 0.47 to hit $53.00 a barrel, while the December gold contract fell 0.04% or 0.40 to trade at $1096.50 a troy ounce.
A day earlier, gold prices ended the U.S. day session moderately higher, lifted
on some safe-haven demand, short covering and bargain hunting.
World stock markets were under selling pressure and gold benefitted
following a sharp sell-off in the Chinese stock market Monday, with the Shanghai composite dropping 8.5% - the biggest fall in eight years.
The selling pressure in
China is coming amid concerns the Chinese government will not continue
its recent efforts to prop up Chinese share prices, including forcing
sellers to the sidelines and limiting trading in some shares.
If the Chinese markets continue to experience turmoils, then it is likely gold would continue to see at least some safe-haven investment demand.
Meanwhile, as Reuters reported, Tuesday marked a recovery for Asian stocks which rose from the day's lows as Chinese equities see-sawed after Beijing scrambled to prop them up.
In the mid-afternoon the Shanghai market benchmark was down more than 3 percent, then pared some of the loss.
Some investors took shelter from market volatility in safe-haven assets such as government bonds and the Japanese yen. U.S. Treasurys rallied, sending the yields on the 10-year note down 4 basis points to 2.22%. Yields move inversely to prices.
USD/JPY was last at 123.57, higher 0.26%.
Traders are looking forward to this week’s Federal Open Market Committee (FOMC) meeting, which begins Tuesday morning and ends with a statement Wednesday afternoon. Traders and investors will seek hints on the precise timing of the Fed’s looming interest rate rise.
