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Commodities

Gold prices pull back after hitting highest levels in 2 weeks

Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.

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gold, Gold fast losing the battle to Bitcoin

Gold prices pulled back a little of its gains recorded on Thursday, as it traded near its highest level in nearly two weeks.

The greenback’s slight rebound at Asia’s trading session on Friday dented the precious metal’s upsides.

Gold prices have been rallying high on reports that President Joe Biden’s administration would push for more quantitative easing programs in order to support the world’s biggest economy.

READ: Gold rebounds strongly amid COVID-19 crisis

At the time of drafting this report, Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.

What you must know: It’s key to note that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets.

  • Humans are emotionally and physically drawn to gold. It provides a significant store of value.
  • Global Investors buy gold mainly to hedge against inflation.

READ: Gold on a grand slam win, gains $40 per ounce

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the recent price movements prevailing at the precious market;

“Gold bears have entered a temporary state of hibernation. The yellow metal seems to be past the lows for the month as the current ” everything but the kitchen sink ” policy backdrop and FX tailwinds for precious metals remain favorable.

READ: Gold rockets above $1850 as it continues 9-year high

“Resistance lies at the 100-day moving average at $1884. But the market needs a few more ounces of policy conviction for a break higher. Treasury yields should dictate the direction of bullion and a rally could quickly ensue if further inflation expectations kick in.”

Bottom line: The yellow metal bugs are still in play, at least for the slightly longer horizon, given that global central banks are likely to stay dovish for an extended period of time.

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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Commodities

Oil prices plunge on surging U.S. dollar

U.S. West Texas Intermediate (WTI) crude futures were down by  0.6%, to trade at $63.17 a barrel thereby giving up all of Thursday’s gains.

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Oil prices gain likely to halt over demand uncertainty as US-China tension intensifies

Oil prices drifted lower at the last trading session of the week. The plunge is attributed to the surging U.S. dollar and expectations revealing more supply is likely to come back to the market as global energy demand has improved significantly.

What you must know: At the time of writing this report, U.S. West Texas Intermediate (WTI) crude futures were down by 0.6%, to trade at $63.17 a barrel, thereby giving up all of Thursday’s gains.

Brent crude futures dropped about 0.3%, to trade at $66.70 a barrel. The April contract expires on Friday.

READ: Oil prices tumble, oil traders jittery on OPEC+ meeting

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave an indepth analysis on why crude oil prices are currently having a downturn.

“Stronger US dollar, especially against Asia EM and higher bond yields, lead to the selling of long-duration assets. And given the massive overweight of “long duration, infinite growth tech” at the index level, stocks are capitulating.

“And the domino effect is starting to hit commodities like oil triggered by a correction in the reflation trade due to higher US yields that are becoming a significant source of market volatility.

“Next week’s OPEC+ meeting has more potential to be damaging than a positive catalyst given the optimism now priced into oil and the likelihood the group takes steps that could prompt a round of profit-taking.”

READ: Oil Price: A dead cat bounce in the making?

What to expect: Oil pundits, however, anticipate the bearish trend might likely be short-lived, given evidence of an ongoing demand rebound and the likelihood that oil markets remain tight this year.

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Commodities

Gold breaks below $1,800 per ounce, amid rising U.S Treasury yields

At the time of writing this report, the blinky metal at the futures market was trading at $1,796.40 per ounce.

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gold, Gold fast losing the battle to Bitcoin

Gold drifted below the $1,800 price level at the fourth trading session of the week due to higher U.S. Treasury yields. Also, U.S. Federal Reserve Chairman, Jerome Powell, maintained that the current ultra-easy monetary policy paused buying pressure on the yellow metal’s appeal.

At the time of writing this report, the blinky metal at the futures market was trading at $1,796.40 per ounce.

What you need to know: Usually, higher inflation boosts the price of the precious metal in principle, but also helps U.S Treasury yields (gold’s arch-enemy), which in turn helps the opportunity cost of holding the safe haven shinny asset.

READ: Gold suffers its worst January performance since 2011 amid rising U.S dollar

The U.S Fed Chief recommitted to getting the world’s largest economy back to full employment during his testimony before the House Financial Services Committee.

He tried calming fears about inflation in the $20 trillion powered economy, emphasizing that he would only start worrying about it if prices began to rise in an aggressive and troubling way.

Benchmark U.S. Treasury yields are currently at the highest levels in a year.

Stephen Innes, Chief Global Market Strategist at Axi, gave further insights on the political macro condition that could determine the precious metal’s future, at least for the midterm, knowing fully well that gold is priced in the U.S dollar.

READ: Nigeria’s first and largest industrial-scale gold mine set to be completed in first half of 2021

“Gold broke below USD1,800/oz. Such a break below that level this month has done some psychological damage to the market, I believe.

“On the political side, President Biden’s incentives look fully aligned with getting the US economy and populations as healthy as possible ahead of the 2022 mid-term elections.

“If both fiscal and monetary policy makes maximum efforts into a post-pandemic recovery, then at the very least we will get temporary inflation along with plenty of debate whether it might become more permanent.

READ: Gold fast losing the battle to Bitcoin

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Bottom Line
Gold traders are not keen on going bullish, at least for the near term, on the bias that rising U.S Treasury yields see investors showing less interest in the yellow metal.

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