Commodities
Gold loses $70 dollars in an hour after reaching $2,000
The rush for gold by global investors has been boosted by a weakened greenback.
Gold lost about $70 after setting a new price record of $2,000 an ounce just a few hours ago at London’s trading session. This happened as market volatility in the precious metal market went bizarre.
At about 6.12 GMT, gold futures was trading at around $1930 per ounce.
What this means: Gold lost about $70 dollars within an hour because gold bulls got exhausted following the sudden price jump to $2000. In other words, gold traders pulled back momentarily, partly due to the fact that the U.S dollar regained some strength, thereby limiting gold’s rapid upside.
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In the meantime, it appears that investors are still uncertain about which direction gold is heading. This has led to gold traders pulling back some of their long positions. Note that if global stimulus packages do not get withdrawn at some point, the world’s economy might suffer from a financial asset bubble.
Meanwhile, Stephen Innes, the Chief Global Market Strategist at AxiCorp, gave Nairametrics some insights regarding the drivers pushing gold to new record highs. He said:
“Gold is jumping in Asian trading hours again and is taking the rest of the precious metals complex higher. The latest surge in demand out of China suggests gold could easily break $2000, maybe even by the end of the week.”
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Stephen Innes also gave an account of the U.S dollar weakness which had been helping to buoy the value of gold upward. He said:
“US-China relationship strains further; concerns about inflation as oil prices firm up alongside the broad U.S. dollar weakness which has gathered up speed and all of which makes for a perfect complimentary basket of drivers to push gold higher.”
The backstory: The rush for gold by global investors had been boosted by a weakened greenback, which fell to the lowest point in over a year, on hopes that the Federal Reserve will continue to stimulate the world’s largest economy when it convenes this week.
Commodities
Brent Crude price trades at $45 per barrel, as fuel demand picks up
Brent crude held most of it gains from the previous trading session.
Brent Crude oil prices dropped slightly at Asia’s trading session.
Brent crude prices held most of it gains from the previous trading session after U.S. government data showed a fall in U.S Crude Stockpiles supporting the view that fuel demand is picking up despite the COVID-19 pandemic.
Brent crude was slightly down by 0.07% to trade at $45.40 a barrel by 04.32 GMT, after a gain of around 2% in the previous session.
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Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of crude oil of about two-thirds of the world’s traded crude oil including Nigeria’s crude.
However, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, revealed vital macros, that could keep crude oil relatively stable in the coming days. He said;
“But even worries around stalled US fiscal talks are partly offset by the US administration’s conciliatory tone on China’s compliance with the ‘Phase One’ trade deal.
“The upcoming six-month assessment seems unlikely to prompt any significant fireworks. Also, investor’s optimism remains high on a vaccine cure that is no longer being viewed as a pie in the sky.
“Finally, the US dollar’s weakness helps Oil prices in general, but even more so in this environment, as the weaker US dollar reflects a global “risk-on” environment, not a flagging US economy. “
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Global COVID-19 cases now exceed 20 million, so in the absence of meaningful progress on a COVID-19 vaccine, traders are still looking over their shoulders to where new lockdowns might be necessary.
Commodities
Gold prices drop below $1,900 after U.S dollar strengthens
The plunge came as appetite for risk assets recovered thanks to a stronger greenback and real rates.
Gold prices dropped sharply on Wednesday at London’s trading session. Gold futures were down 2.69% to trade at about $1,893.20 as at the time this report was drafted.
The plunge came as appetite for risk assets recovered, thanks to a stronger greenback and real rates. The U.S dollar is up on Wednesday, continuing to rise from its two-year lows.
The present huge sell-offs recorded in the precious metal market astonished many gold traders after the per-ounce price of the yellow metal plunged below $1,900.
READ MORE: Silver surpasses three-week high, joins Bullish momentum
Here’s an Insight: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros, giving Gold bears such strength, as the precious metal continues its sudden downward trend. He said;
“The real pain trade gold as swollen positions got hit with the truncheon, and gold plunged the most in seven years as the bottom fell out of the markets with US Treasuries and bunds bear-steepening and real yields higher.
“Gold markets sold off picking speed exponentially as freshly minted gold longs ran for the exit.
“And in typical low liquidity August fashion, market makers were merciless pounding gold to within a hair’s breadth of $1900 as the steam roller got heading downhill when the afternoon Shanghai session saw waves of Asia banks selling en masse.”
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Whether or not gold can regain its previous highs will depend on whether there is more room for downside in real yields or more dovish policies by the US Federal Reserve. Still, the possibility of squeezy price action remains in play after the US Bond market sent out the most explicit warning last week.
Commodities
Gold price loses $80 following Russia’s COVID-19 vaccine approval
This marks gold’s steepest daily decline in nearly five months.
Gold futures have lost about 5% or $80 in less than four hours, at the London trading session this afternoon.
Gold futures fell as low as $1,950 per ounce, $80 differential from its opening price of $2,030
This marks gold’s steepest daily decline in nearly five months, even as global stocks went bullish following news that Russia’s COVID-19 vaccine has obtained regulatory approval.
READ MORE: Cocoa prices melt lower as COVID-19 weakens demand
The COVID-19 vaccine approval by Russia was met with some skepticism by experts.
Russian President Vladimir Putin announced on Tuesday that a locally developed vaccine for COVID-19, Sputnik-V, has been given regulatory approval and is ready for use.
Russian Health Minister Mikhail Murashko said that the vaccine had “proven to be highly effective and safe”, with mass vaccination planned to start in October.
But health regulators elsewhere have cast doubts on the vaccine, as it has not yet gone through safety trials and Russia did not offer any scientific evidence of the vaccine’s effectiveness and safety.
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