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Gold prices bounce higher, amid falling dollar

Precious metal futures gained over 1% to trade at $1917/ounce surging above the $1.900-mark.

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Nigeria Mining Sector shows growth prospect despite low bank credit provision, Gold hits eight-year high as global recession sentiments strengthened, Gold hits three weeks high, Investors rush to gold, Gold Future Drops to $1727.80 as Tensions Escalate between America and China, Precious metals slump, investors focus on Central Bank’s intervention, FG inaugurates gold refinery project in a landmark event

Gold prices rallied on Friday’s trading session, amid selling pressures witnessed on the U.S dollar Index, coupled with high hopes on the latest fiscal U.S. stimulus package coming from the world’s largest economy.

At the time of writing, the precious metal futures gained over 1% to trade at $1917/ounce, surging above the $1.900-mark.

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

On the political spectrum, discussions between the Speaker of the U.S House of Representatives, Nancy Pelosi, and Treasury Secretary Steven Mnuchin resumed yesterday, coupled with President Donald Trump disclosing that talks with U.S lawmakers have resumed, despite the ban he placed on the ongoing stimulus package deal before the presidential election.

In addition, Trump boosted the morale of global investors, with his latest interview talking on the high probability of reaching a consensus over the stimulus deal. For her part, Pelosi said that legislation would support the American aviation industry which had been negatively  affected by the COVID-19 resurgence.

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READ: NNPC signs gas development and commercialization deal with SEEPCO

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the prevailing market condition boosting the yellow metal prices. He said:

“Gold is trading higher due to stimulus expectations, but the yellow metal is getting held back by the prospects of higher US yields and the Euro offering little support for Gold while trading below 1.1800.

READ: Bitcoin could potentially become superior to cash

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“While the “Blue Wave” stimulus deluge is favorable for Gold, the resulting US treasury curve steepened not so much.

“The World Gold Council gave also gave the precious metal the needed boost via its statement that gold-backed, ETFs gained more than 1,000 tons of bullion worth $60 billion at current prices to their stockpiles during the first nine months of 2020, catalyzing a price rally.”

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

Oil prices suffer worst trading loss in a month

Oil prices were under pressure on fears of recent lockdown measures sighted in China.

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Crude Oil worker, OPEC, oil prices, Bulls hit back to support US crude oil amid panic sell- offs in global equity markets, Nigeria’s local oil players smashed by low crude oil prices

Crude oil prices suffered their worst trading loss in a month, tumbling by more than 2% at Friday’s trading session.

Oil prices were under pressure on fears that recent COVID-19 lockdown measures sighted in the world’s largest buyer of crude oil, China, could in the coming days exhibit weakness in energy demand.

What you should know: A strong U.S dollar, the currency on which crude oil is primarily sold, made purchasing of the commodity less competitive for holders in other currencies like the Euro, Japanese yen, thereby weighing on oil prices

  • U.S based oil contract, West Texas Intermediate futures, plunged by 2.2.% to settle at $52.36 per barrel. It is the oil contract’s biggest one-day drop since December 18, although it rounded out the week with a 0.5% upsides.
  • The British-based oil contract, which is the global benchmark for crude, settled down $1.32, after losing 2.3% at $55.10. For the week, Brent crude prices lost about 1.6% in value.
  • The world’s second-largest economy ramped up lockdowns yesterday, after reporting the highest number of daily Covid-19 cases in more than 10 months.

China capped a week that has resulted in more than 28 million people under lockdown as it suffered its first COVID-19 death on the mainland since May.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing macro conditions keeping oil prices relatively high, taking into account Saudi’s recent pledge to curb production, and the influx of COVID-19 vaccines to tame the ravaging virus:

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“With Saudi Arabia providing the cornerstone and bridging the gap to vaccine oil market lift-off. With the renewed enthusiasm about the US demand recovery due to the prospects for more stimulus and the new administration’s pledge to focus on the vaccinations’ rollout, oil prices are lifting higher locking to hash out higher ranges.”

What to expect: Oil traders are entering a critical phase as oil remains sensitive to the news, with negative implications for the demand recovery.

The oil market recovery is vital for blunting the effect of higher nominal US Treasury yields through the reflationary channel. If oil doesn’t fly higher, the reflation trade could fall flat on its face.

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Commodities

Oil drops amid strong import data from world’s largest buyer

Oil prices are under pressure, and recent customs data reveal that crude imports into China were up 7.3% in 2020.

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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 drifted lower at the last trading session of the week. Surprisingly oil prices are down in spite of strong import data from China on the bias that the recent COVID-19 outbreak in the world’s largest crude oil importer has led to major lockdown measures.

READ: Oil prices rally up as market looks to OPEC+ meeting

What you need to know

  • At the time of writing this report, Brent oil futures were down by 0.32% to $56.24 a barrel, and the West Texas Intermediate futures down by 0.11% to $53.5o a barrel.
  • Oil prices are under pressure, and recent customs data reveal that crude imports into China were up 7.3% in 2020.

READ: FG borrows N2.8 trillion from CBN via Ways and Means

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics, spoke on the prevailing macro conditions keeping oil prices relatively high, taking into account Saudi’s recent pledge in curbing production and the influx of COVID-19 vaccines to tame the ravaging virus in causing more harm;

“Oil prices are higher rising to a fresh ten-month high on stimulus expectation as consumers could spend a portion of the direct deposit on gasoline purchase.

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“But it’s perhaps the infrastructure component of the US stimulus efforts that will resonate bigger given the current COVID19 concerns that are pushing back on gasoline demand.

“And with Saudi Arabia providing the cornerstone and bridging the gap to vaccine oil market lift-off. With the renewed enthusiasm about the US demand recovery due to the prospects for more stimulus and the new administration’s pledge to focus on the vaccinations’ rollout, oil prices are lifting higher locking to hash out higher ranges.”

READ: Nigeria’s GDP growth to rebound between 1.7% and 2.0% in 2021 – United Capital report

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What to expect;  Oil traders are entering a critical phase as oil remains sensitive to the news with negative implications for the demand recovery.

  • The oil market recovery is vital for blunting the effect of higher nominal US yields through the reflationary channel. If oil doesn’t fly higher, the reflation trade could fall flat on its face.

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Commodities

Oil prices drop, traders weigh a rising number of COVID-19 attacks

Oil traders are now weighing the ever-rising number of COVID-19 cases and the impact on global energy demand.

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Oil workers will be paid N75 billion worth of salaries in 2020 , Oil production drops, as Nigeria complies with OPEC+ output cuts  , Global oil demand set to plunge by 29 mb/d Global oil demand set to plunge by 29 mb/d

Oil prices dipped lower at the fourth trading session of the week, as traders are now weighing the ever-rising number of COVID-19 cases and the impact on global energy demand against a fifth consecutive week of declines in US oil production.

The number of global COVID-19 cases surpassed 90.87 million as of Jan. 12, according to Johns Hopkins University data.

READ: Gold fast losing the battle to Bitcoin

What you should know

  • At press time, Brent oil futures slumped by 0.16% to $55.97 and West Texas Intermediate futures edged lower by 0.15% to $52.83. Both major oil benchmarks however remained above the $50 mark.
  • The oil market’s recent bullish rally took a halt as the stronger dollar and the ever-present gasoline supply overhang offset the drying up of U.S. crude inventories.

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Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on OPEC+ intentions coupled with the world’s largest economy crude oil stockpiles’ macro:

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“Oil market sizzling rally likely took a hiatus as the stronger dollar and the omnipresent gasoline supply overhang offset the evaporating US crude inventories capping both primary benchmarks under key psychological and technical inflexion points.

READ: Understanding Carbon Credits and Carbon Offset market

“Even before the not so rosy gasoline read on the US Department of Energy (DOE) report, this gnawing temporal disconnect was weighing on market sentiment with spot miraculously trading better now than they were before the pandemic.”

READ: FG posts 27% revenue shortfall in 2020 as budget deficit hit N6.1 trillion

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What to expect

  • Oil is still pricing in a great deal of optimism linked to the roll-out of Covid-19 vaccines, but any negative development would prompt a sharp negative reaction.
  • Still, demand will gradually improve as more folks get vaccinated, and the supply side is under control thanks to OPEC+ and Saudi Arabia’s continued efforts.

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