Commodities
Gold prices surge past $2,020 due to weaker U.S dollar
The price of Spot gold as at 05.59 GMT was up by 0.20% to trade at $2,023.41.
Gold continued its bullish rally on Wednesday morning. The precious metal extended its new record run above the $2,000 mark, due to a weaker greenback and hopes of more stimulus packages to revive the world’s fragile economy.
The price of Spot gold as at 05.59 GMT was up by 0.20% to trade at $2,023.41. Gold prices have gained about 33% this year.
The U.S. dollar, which is often considered a safe-haven currency, dropped by 0.3% against its major rivals, thereby making gold cheaper for holders of other currencies.
READ MORE: IMF expects global GDP to shrink by 4.9% in 2020
Why it’s happening
As usual, AxiCorp’s Chief Global Market Strategist, Stephen Innes, explained to Nairametrics the macros helping gold to surge past record highs. He said:
“Concerns remain around a second wave in Europe as daily case growth has started to accelerate from shallow levels in most countries.
“However, the levels are nowhere near that seen in the US, which is now on a downward trajectory.
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“Still, markets fear a second Covid-19 surge into winter (northern hemisphere), and the associated rise in volatility still favors gold as a defensive strategy.
“But the economic damage is done, and even a vaccine is not going to bring back lost assets in Global GDP terms that when up in smoke. The only real cure to claw back some of that lost GDP is global interest rates low for as far as the eye can see and even redoubled amounts government stimulus, which is highly favorable for gold.”
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Also note that the price of gold also continues to be supported by the ongoing the weakness in the dollar as well as hopes on negotiations for a new COVID-related aid package in the U.S.
Commodities
Crude oil prices fall on fears of global energy demand
In Thursday’s trading session, Crude oil prices fell
Crude oil prices dropped at Thursday’s trading session. This slide is attributed to recent poor E.U. economic data, and a lower-than-expected U.S. gasoline demand. Fears of a second wave of COVID-19 in emerged economies also weakened investors’ enthusiasm.
What we know: Brent oil futures fell 0.57% to $41.53 by (6:40 AM GMT) and WTI futures slid 0.78% to $39.62.
The E.U. released purchasing manager index data that heightened fears about the region’s economic recovery hopes, with the services index dropping by 50-mark, separating growth from contraction.
READ: Crude oil prices record gains after tropical storm hit Gulf of Mexico
The U.S. Energy Information Administration (EIA) released figures on Wednesday showing a lower-than-expected draw of 1.639 million barrels for the week to Sep. 18, against a forecast 2.325 million-barrel draw. U.S. demand for gasoline was down 9% at this time last year.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in an explanatory note to Nairametrics, gave detailed insights on the bearish run prevailing in the oil market.
“Crude oil prices initially reversed their decline overnight after the Energy Information Administration reported that commercial oil stocks trended down due to a large draw in products with gasoline stocks back down to their 5-year average.
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“Yet it was all for naught after US Federal Reserve Chair Jay Powell pancaked global markets with a discordant economic warning and a penetrating call out for more stimulus to congress,” Innes stated.
Oil traders are bringing crude oil price recovery to a screeching halt with nervous investors seeking out the US dollar’s safety.
Commodities
Gold prices bow to rising dollar, trades below $1,900/ounce
Gold futures was down 0.89% to trade at $1,890.60 an ounce on Wednesday’s trading session.
Gold prices remained under intense pressure at the Wednesday trading session, as it went below $1,900/ounce. The slide is attributed to the rise of the U.S dollar, firing up on all cylinders on the macro that fresh COVID-19 lockdowns will be implemented in London and other parts of Europe.
What we know: At the time this report was drafted, gold futures was down 0.89% to trade at $1,890.60 an ounce.
READ: World Bank puts pressure on Nigeria for more forex reforms to aid recovery
Why the yellow metal is falling now
Rising COVID-19 caseloads in emerged markets have distorted investment strategies of global investors as the world’s economic recovery seems to be fragile, driving investors into dollars, which has weighed on the bullion-asset.
On top of that, gold traders also have unwound some of their gold holdings as a part of this week’s equity-market sell-offs, which added to the pressures around precious metals.
READ: Gold rockets above $1850 as it continues 9-year high
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note, spoke on the selling pressure that the yellow metal is presently facing, as it seems the bears are having the upper hand.
“Gold has fallen out of favor; still, the downside may also be limited due to low yields and geopolitical and trade risks that are likely to provide a price floor.
READ: Covid-19: FG reports 36% drop in confirmed cases, disburses N32 billion to 32 states
“The lack of a bounce after Monday’s drop is not encouraging. While gold does not look persuasive, there is a limit to how low it is likely to fall – at least ahead of a highly contentious US election, a climate of highly charged geopolitical risks, and renewed COVID-19 concerns.
“The precious metal might continue to struggle to make new highs.”
Commodities
Crude oil prices drop again after losing 4% on Monday
Oil benchmarks fell around 4% on Monday following rising concerns of increased coronavirus cases.
Crude oil prices drifted lower at the later part of Asia’s trading session on Tuesday, as Tropical Storm Beta in the Gulf of Mexico weakened.
What we know: Brent oil futures were down by 0.31% to $41.31 at the time this report was drafted, and WTI futures fell by 0.23% to $39.22.
Both oil benchmarks fell around 4% on Monday, hit by rising concerns that an increase in coronavirus cases in major markets could spur fresh lockdowns and hurt demand.
READ: Chevron Nigeria invests $1.45 billion in local content development
Oil prices are falling again amid Tropical Storm Beta reduced in power in the Gulf of Mexico, allaying fears of an extended shutdown that began in the previous week with Hurricane Sally.
In a note to Nairametrics, Stephen Innes, Chief Global Market Strategist at AxiCorp, spoke on the macros disrupting the price of hydrocarbon.
READ: Soybean Futures reach 2-year high, following U.S sales to China
“In line with broader markets, oil prices were hammered lower overnight as the growth assets buckled amid lockdown fears in Europe and the UK.
There continues to be concern around the effects on demand of the resurgence in Covid-19 cases globally as countries have to counterbalance the economic and health issues in getting back to work. The second half of 2020 was always going to reflect this price see-saw.
While mother nature is doing its part as traders focus on the hurricane season in the US, OPEC+ cuts seem to be tightening the market.”
READ: The implications of India’s recent ban of its seafarers off Nigeria’s waters
However, the COVID-19 crisis continues to deepen with growing concerns about global energy demand arising from the latest data on the spread of the virus in major world economies such as the U.K.
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Ferguson sunny
August 5, 2020 at 8:00 am
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