Gold rose beyond the $1,800 per ounce target long eyed as a result of bulls on the commodity as concerns increase over the second wave of COVID-19 infections as well as increasing stimulus measures geared towards mitigating the economic effect of the pandemic. A number of analysts also predict that the safe-haven asset would attain record highs above $2,000 in the months to come as COVID-19 cases further increase. At 6:30 am today, the price stood at $1801.5.
U.S. gold futures on Comex had risen by $19.30, or 1.1%, at $1,800.50, after hitting an intraday high at $1,803.95. This was the highest reached by a benchmark Comex contract for gold since its all-time peak of $1,911.60 in September 2011. Spot gold also increased by $8.58, or 0.5% at $1,781.20, after a session high of $1,785.97. That was also the highest since its September 2011 record of $1,920.85.
Philip Streible, the chief market strategist at Blue Line Futures in Chicago noted, “I believe that with additional lockdowns happening globally that central banks will continue to support the market at any cost. This should result in the Fed’s balance sheet continuing to grow and in turn provide underlying support in the precious metals markets. Gold should continue to track higher with $1,900 by Labor Day, $2,000 by Thanksgiving.”
In the United States, around 40,000 new coronavirus cases are announced daily in the ongoing outbreak, and it is projected to grow to as much as 100,000 daily. Top U.S. pandemics expert, Anthony Fauci said that this could be the country’s fate without adequate social-distancing amongst other safety measures. Even worse is that some health officials believe that the cases could be as much as 10 times higher than the official count. China, India and New Zealand have also had higher caseloads lately.
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Another determinant of the increasing price of Gold, the U.S. Federal Reserve and Congress have also passed more than $3 trillion in stimulus to mitigate the negative impact of the pandemic on the economy.
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.
At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.
The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;
“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.
But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.
Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”
What to expect
Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.
Oil prices stay on course as Saudi’s Energy Minister reassures traders
British based oil contract traded at about $63 a barrel while the WTI futures were trading slightly below the $60 price level.
Crude oil prices remained relatively firm at the early hours of Friday’s trading session as oil traders digested Saudi Arabia’s defense of OPEC+ plans in raising output thereby capping gains.
At press time, the British based oil contract traded at about $63 a barrel while the West Texas Intermediate futures were trading slightly below the $60 price level.
Saudi energy minister Prince Abdulaziz bin Salman recently revealed that there were no pressing concerns of demand/supply dynamics changing gear amid the gradual boost in outputs in an interview aired on Thursday, adding that OPEC+ had all ammunition put in place to change course if necessary. OPEC+ will continue to meet monthly on reviewing the energy market supply dynamics.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the prevailing market sentiment amid macros pointing to more oil supplies hitting the sensitive energy market and an upsurge in COVID-19 caseloads.
“Positioning is much cleaner, although the market remains directionally long oil. However, the sudden calm and drop in volatility have attracted passive investors back to the fray as the market structure around prompt spreads start to tighten and the dollar begins to roll over.
“Still, the conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers in India plus parts of Canada as well as Tokyo backtracking into the lockdown Abyss, together with reports linking the UK’s Covid-19 vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay.”
What to expect: The most recent OPEC+ agreement on releasing barrels into such present demand was not out of place – suggesting the futuristic price of oil might range between the $60 -$70 price levels with production normalization vs current high excess production capacity taken into consideration.
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