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Commodities

Gold down over increased investor confidence in economic recovery

Gold futures have been down lately, as global investors lose interest in various safe haven assets and instead, commence investments in riskier assets.

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Gold, Gold prices tick up as President Trump decides on China today, Gold Prices Surges, Protests Erupts In America, Gold Down Over Increased Investor Confidence in Economic Recovery, Gold futures reach two months high over rising Covid-19 cases  

Gold gave up on its previous gains on Tuesday morning in Asia after the U.S. shares rally overnight. The safe-haven asset in its true fashion, went down after the S&P 500 reverted its losses and turned positive for the year.

As at 12pm ET (5am GMT), gold futures were down by 0.22% to $1,701.35. Gold futures have been down lately, as global investors lose interest in various safe-haven assets and instead commence investments in riskier assets. One such asset that has witnessed even more interest is the equity market and this has been further enhanced with the U.S dollar gaining strength in recent days.

READ MORE: U.S regulator invites Banking and Crypto industry leaders for partnership

With the newly recorded positives of the S&P 500, investors had switched interest from the metal as their confidence was enhanced with the overall recovery of the economy. Consequently, their risk appetites also increased.

Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note, had explained that, “The yellow metal is on a reasonably steady downtrend, most likely on the back of the great run in equity markets over the past few weeks, which could see fast money continue to sell on rallies.

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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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