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Commodities

Gold traders under pressure, as it drops below $1,900

Gold futures prices edged down 0.17% at $1,887/ounce at the time this report was drafted.

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ETF, stocks, shares, investment, equity,Gold loses some shine on hopes for COVID-19 vaccines

Gold price drifted lower on Thursday at Asia’s trading session with renewed hopes for more U.S. stimulus deal leading, gold traders to retreat from buying more of the precious metal.

What we know; Gold futures prices edged down 0.17% at $1,887/ounce at the time this report was drafted. Unsurprisingly, global stocks led by Asian stocks printed higher.

READ: Gold prices post losses, U.S stimulus deal kept on hold

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.

READ: Petrol pump price may drop in October – PETROAN

The US President in a tweet seen by Nairametrics directed Congress to pass money for airlines, small businesses, and stimulus checks of $1,200 for individuals, after pausing talks with the opposition party over the latest stimulus deal.

However, the chances of even the present mini-stimulus package seeing the light of day at U.S capitol before the U.S Presidential election seems dim with U.S fiscal officials downplaying the possibility, and Speaker Nancy Pelosi hitting back at President Trump for halting the talks on a more detailed stimulus deal

READ: Apple, Microsoft gain over 1%, propels Nasdaq up

Stephen Innes, Chief Global Market Strategist at Axi gave key insights on why the precious metal seems to be out of favor in the near term by saying; “The yellow metal seems to be falling out of favor again and maybe getting dissuaded by the rise in US yields and the lack of follow-through on US dollar selling, particularly against the Euro.

READ: Best performing global financial assets in the last 7 days

“I still think bullion finds its short-term legs as there should be enough volatility from the election, particularly from retail investors to aid gold. Also, a stimulus package is not permanently off the table. On the margin, this will be gold supportive and there should be good demand towards the 100-day moving average around $1958.”

The U.S treasury yields are becoming attractive to taper the precious metal bulls’ run.

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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. He is a Member of the Chartered Financial Analyst Society.

1 Comment

1 Comment

  1. Amarjeet Singh

    October 8, 2020 at 10:56 am

    It’s a phase of consolidation for the precious metal.Sooner or later it will resume its upward journey.

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Commodities

Oil prices plunge on surging U.S. dollar

U.S. West Texas Intermediate (WTI) crude futures were down by  0.6%, to trade at $63.17 a barrel thereby giving up all of Thursday’s gains.

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Oil prices gain likely to halt over demand uncertainty as US-China tension intensifies

Oil prices drifted lower at the last trading session of the week. The plunge is attributed to the surging U.S. dollar and expectations revealing more supply is likely to come back to the market as global energy demand has improved significantly.

What you must know: At the time of writing this report, U.S. West Texas Intermediate (WTI) crude futures were down by 0.6%, to trade at $63.17 a barrel, thereby giving up all of Thursday’s gains.

Brent crude futures dropped about 0.3%, to trade at $66.70 a barrel. The April contract expires on Friday.

READ: Oil prices tumble, oil traders jittery on OPEC+ meeting

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave an indepth analysis on why crude oil prices are currently having a downturn.

“Stronger US dollar, especially against Asia EM and higher bond yields, lead to the selling of long-duration assets. And given the massive overweight of “long duration, infinite growth tech” at the index level, stocks are capitulating.

“And the domino effect is starting to hit commodities like oil triggered by a correction in the reflation trade due to higher US yields that are becoming a significant source of market volatility.

“Next week’s OPEC+ meeting has more potential to be damaging than a positive catalyst given the optimism now priced into oil and the likelihood the group takes steps that could prompt a round of profit-taking.”

READ: Oil Price: A dead cat bounce in the making?

What to expect: Oil pundits, however, anticipate the bearish trend might likely be short-lived, given evidence of an ongoing demand rebound and the likelihood that oil markets remain tight this year.

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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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