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Commodities

Gold prices drop, as President Trump shows sign of recovery

At the time this report was drafted gold was trading below the $1,900 price levels.

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Gold on a grand slam win, gains $40 per ounce

Gold drifted lower at the first trading session for the week. Gold traders seem to be pulling their long positions, from the safe-haven asset over macros, that U.S. President Donald Trump could soon be discharged from the hospital as early as today, where he is being treated for COVID-19.

At the time this report was drafted, gold was trading below the $1,900 price levels. Just before the recent slump, the precious metal had posted its biggest weekly percentage gain since early August, last Friday, in the wake of President Trump and his wife Melania Trump catching the COVID-19 bug.

READ: NASD OTC market capitalization hits N538.12 billion, as investors gain N9.22 billion

His doctors disclosed yesterday, that the President was recovering and could be discharged as early as Monday. Unsurprisingly, global stocks futures were trading up.

Quick Fact: It should be noted that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets. Humans are emotionally and physically drawn to gold. It provides a significant store of value. Global Investors buy gold mainly to hedge against inflation.

However, Stephen Innes, Chief Global Market Strategist at Axi, shared a contradictory opinion, putting his odds with the precious metal in an explanatory note,

“The markets maintain a favorable view of gold. Still, travel direction is unlikely to be a straightforward process dotted with periods yields backing up, and bouts haven strength should create headwinds along the way.

READ: Presidency questions how many Nigerians have cars, generators, defends fuel price hike

“After gold initially surged on haven demand gold on Friday, bullion gave way to a stable dollar and as risk stabilized.

Ostensibly, the president testing positive for COVID-19 appears gold bullish. It adds to uncertainty, as we head into an election. Still, with the dollar holding firm, it lessens the appeal for gold.”

Ultimately, how the yellow metal reacts in the future will be best viewed through the value of the U.S dollar index.  EURUSD near term direction, given gold sensitivity to the cross, will likely hold the cards.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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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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Commodities

Oil prices drop as gasoline demand from U.S refineries remain poor

Oil prices suffered significant losses at the mid-week trading session in London.

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global oil market, Bonny Light and Brent crude oil, Arthur Eze, Nigeria cuts crude oil production to 1.77mbpd, Nigeria wants international oil companies to pay up now , OPEC+ deal gets a boost as Russia and Saudi Arabia consider further output cut, 4 key reasons why Brent crude might slip back to $35 per barrel, How substantial is compliance for the Oil market?

Oil prices suffered significant losses at the mid-week trading session in London. Oil traders are virtually going short on macros revealing an unexpected build in U.S. crude inventories.

The surge in U.S oil inventories was attributable to the unprecedented cold snap that hit a key energy hub in the world’s largest economy during the previous week thereby pausing gasoline demand from refineries that were forced to close down.

At the time of writing this report, Brent crude was down 0.60% hovering around the $64 per barrel.

READ: Oil prices fall under pressure over rising number of COVID-19 cases in China

However, both major oil benchmarks remained above the $60 price levels.

The most recent data from the American Petroleum Institute revealed a surge of 1.026 million barrels for the week ending Febuary.19. Oil experts had earlier anticipated a 5.372-million-barrel drop.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on prevailing market conditions weighing on the black hydrocarbon

READ: Gold traders go wary over rising U.S. Treasury yields

“With excessively stretched positioning and highly susceptible to any negative news, WTI dropped towards the $61 level after the API stockpiles jumped +1.026 million barrels versus the previous draw of 5.8 million barrels during the period ended on February 19.

“Although the commodity prices dropped following the bearish stockpile data, bulls probably won’t be charging back to the pen en masses as the smoldering embers around the Middle East powder keg threaten to ignite once again as the US-Iran conflict continues to simmer but at a higher heat level today.”

READ: World’s largest oil producer loses four million barrels per day

What to expect: Still, Oil pundits expect more visibility on oil traders move at the end of next week with the next round of monthly OPEC+ meetings. Outside of a rise in geopolitical risk, upside momentum could be limited in the coming days as oil traders wrestle with OPEC+ next move.

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