Gold pushed past the $1,800 mark yesterday, as bulls controlled the precious metal’s surge to spur its prices to new nine-year high.
The real-time barometer for bullion prices showed that spot gold was up 0.8%, to trade at $1,811 by 6.20 am Nigerian time.
In addition, gold bulls had their momentum boosted as data showed that the world’s biggest economy had added a million cases of COVID-19 infections in just 30 days, while nations spared of the virus’ onslaught like Sweden, recorded surging death rates.
“Gold is roaring higher as a number of uncertainties to the outlook persist and as the dollar slides,” said Ed Moya at New York-based online trading platform OANDA.
“The Fed has acknowledged that corporate bond-buying could slow if market conditions improve further. But the intensifying wave of the virus in the U.S. will likely see that not happen anytime soon,” Moya said, reinforcing expectations that the central bank’s support for the American economy and markets will continue, weighing on the dollar and boosting gold.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, explained the fundamentals on gold. He said:
“But other gold buyers are looking through the run of robust US data thinking that mid-June was a sweet spot in the high-frequency metrics, and things will go downhill from here due to COVID-19 resurgence and particularly as investors anticipate further policy stimulus.
“Specifically, gold still appeared to gain traction on carryover buying from comments made by regional Fed Presidents Bostic and Daly the previous day, cautioning that the economy may be plateauing.
“We could see some profit-taking set in, but with the dollar turning weaker overnight, we could see an enduring bid hold in around $1805 as the primary motivator for higher gold prices is concerns around the COVID-19.”
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.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- 2020 FY Results: Guinea Insurance Plc reports a loss of N227.7 million.
- 2020 FY Results: Unity Bank Plc posts profit after tax of N2.09 billion.
- Guinea Insurance Plc reports a loss of N142.13 million in 9M 2020.
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- UBA Plc posts profit after tax of N38.16 billion in Q1 2021.