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Commodities

Gold prices drop, U.S dollar rebounds

Gold prices drifted lower as the greenback gained some strength at Asia’s trading session.

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Dollar, Gold soars above $1850, rises to 9-year high

Gold prices drifted lower as the greenback gained some strength at Asia’s trading session. The deadlocked U.S. COVID-19 stimulus deal kept the safe-haven currency, thereby supporting the U.S dollar index.

Gold futures at the time of writing was down 0.23% to trade at $1,903/ounce.

READ: Zamfara establishes its first gold reserve

The yellow metal is falling on the bias that the greenback is strengthening, as global investors look to the U.S dollar against the increasing likelihood of no stimulus deal before the contested U.S election scheduled to hold in a few weeks’ time.

READ: How to protect your crypto from cyber robbers

Treasury Secretary, Steven Mnuchin, had this to say: “The clock will not stop … I’d say, at this point, getting something done before the election and executing on that would be difficult, just given where we are in the level of details, but we’re going to try to continue to work through these issues.”

READ: Gold prices close higher, as U.S Fed Reserve allows high inflation

A surge in new COVID cases, specifically in the Northern Hemisphere, is also pushing the greenback up, with new restrictions coming into play.

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the prevailing macro at the precious metal market. He said, “There was not very much to direct gold prices initially. After falling below $1890 in Asia, gold began a long but uninspiring trek by grinding higher in Europe. Gold looks to be susceptible to market risk vagaries and a weaker Euro. But the economic climate and the anticipated US stimulus is gold supportive. I think the US election and fiscal stimulus developments could be a more significant driver of price action over the next few weeks, and I feel the big gold shops prefer to trade the yellow metal from the long side. But as is so often the case, gold traders are a bit cautious about jumping back in the saddle after a sharp move lower. It looks to be fast money hitting both the tops and bottoms.”

READ: Publicly traded companies own 601,000 Bitcoins, gain $500 million

So far, there has been extraordinarily little real money involvement otherwise.

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.

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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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