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Gold drops to $1,700 territory for the first time since June

Gold futures lost about 1.3% to close at $1,1781.90/ounce, dropping as low as$1,770.65, a price not seen since June 22.

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

The demand for gold diminished at the last trading session of the week, as it fell to $1,700 territory — the first time since June.

What we know

Gold futures lost about 1.3% to close at $1,1781.90/ounce. It dropped as low as $1,770.65, a price not seen since June 22.

READ: Nigerian billionaire, Benedict Peters Plans to mine Platinium in Zimbabwe

Gold bulls have been under intense pressure amid significant sell-offs recorded in recent times, amid positive news on COVID-19 vaccines coupled with strong bias coming from the world’s largest economy, hinting that there would be a smooth transition of power. All of these factors have kept gold bulls in the dust.

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What this means

Gold traders are arbitrarily reducing their long bets, as it seems odd for any investor to go bullish on the precious metal, taking to account that it’s set for the third straight weekly loss.

READ: Pigs on a rampage, Bitcoin drops $2,000

Stephen Innes, Chief Global Market Strategist at Axi, in an email sent to Nairametrics, gave key fundamentals giving the gold bears enough gas to break the precious metal below the $1,800 price level:

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“The positive correlation between gold and the SPX since March flipped after Pfizer’s vaccine announcement on Nov. 9, while negative real yields are not having a positive effect on the precious metal. A transition from disinflationary to inflationary support for gold could take time and ultimately leaves prices vulnerable to more profit-taking and the establishment of more shorts in the near-term.

READ: $385 million worth of Bitcoin moved by unknown identity

“Gold rout continues as investors embrace vaccine news. The break of USD1,800/oz support may take prices near USD1,750/oz as surging investor optimism due to promising COVID-19 vaccines has undermined gold and silver.”

What to expect

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The precious metal will continue to be under immense pressure from the gold bears, taking into account the commanding macro theme related to a vaccine recovery and the reduced risks associated with central bank’s debt monetization, or the pursuit of quasi-modern monetary theory.

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READ: ValuAlliance distributes value fund of N10 per unit for H1, 2020

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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 or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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Commodities

Gold prices pull back after hitting highest levels in 2 weeks

Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.

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gold, Gold fast losing the battle to Bitcoin

Gold prices pulled back a little of its gains recorded on Thursday, as it traded near its highest level in nearly two weeks.

The greenback’s slight rebound at Asia’s trading session on Friday dented the precious metal’s upsides.

Gold prices have been rallying high on reports that President Joe Biden’s administration would push for more quantitative easing programs in order to support the world’s biggest economy.

READ: Gold rebounds strongly amid COVID-19 crisis

At the time of drafting this report, Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.

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What you must know: It’s key to note 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: Gold on a grand slam win, gains $40 per ounce

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the recent price movements prevailing at the precious market;

“Gold bears have entered a temporary state of hibernation. The yellow metal seems to be past the lows for the month as the current ” everything but the kitchen sink ” policy backdrop and FX tailwinds for precious metals remain favorable.

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READ: Gold rockets above $1850 as it continues 9-year high

“Resistance lies at the 100-day moving average at $1884. But the market needs a few more ounces of policy conviction for a break higher. Treasury yields should dictate the direction of bullion and a rally could quickly ensue if further inflation expectations kick in.”

Bottom line: The yellow metal bugs are still in play, at least for the slightly longer horizon, given that global central banks are likely to stay dovish for an extended period of time.

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Commodities

Oil prices tumble on fears that energy demand is dropping

Oil prices drifted lower after digesting a surprising build in U.S. crude oil inventories that re-ignited fuel demand anxiety.

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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 fourth trading session of the week, after digesting a surprising build in U.S. crude oil inventories that re-ignited fuel demand anxiety.

What you should know: At the time of drafting this report, Brent crude prices dropped by 0.37% to trade at $55.87 a barrel, and West Texas Intermediate futures plunged by 0.34% to trade at $53.13 a barrel.

  • Oil prices gave up some of their previous gains made on hopes of a massive COVID-19 stimulus program under U.S. President Joe Biden, although both oil major benchmarks were trading far above $50/barrel.
  • Recent data obtained from the American Petroleum Institute revealed a gain of 2.562 million barrels for the week ending January 15. This was against the 300,000-barrel drop in forecasts prepared earlier by some energy experts.

READ: DEAL: Heirs Holdings acquires 45% of OML 17 from Shell, Total and Eni

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave valid insights on the effect COVID-19 and other macros have on oil prices.

“Oil prices look a tad vulnerable to potential profit-taking after US crude stockpile bearishly rose 2.56 million against consensus draw. Simultaneously, the near-term China crude demand forecast looks high and susceptible to revision lower as lockdown spread in the country ahead of the Lunar New Year.

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“While oil traders see through longer lockdowns on the premise that vaccinations will quickly lead us out of the pandemic, COVID mobility clampdowns still hurt the very near-term view.

READ: Gold prices stay firm, investors await Janet Yellen’s speech

“And since calls for a commodity supercycle have been many after the November vaccine turnaround, open interest in Brent and WTI has increased hugely, suggesting that the market remains very susceptible to any potential bearish headlines big or small, from a positioning perspective alone.”

What to expect: OPEC production at the moment remains well below the level required to meet anticipated demand. It should continue to drive a reduction in oil inventories as the global economy gradually recovers.

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Commodities

Gold’s appeal up thanks to a weaker U.S dollar

More COVID-19 relief programs pushed the yellow metal’s appeal up as an inflation hedge.

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Gold Up as U.S. hits Record Number of COVID-19 Cases, Gold stands firm above $1,800 over increasing virus fears and weaker dollar , Gold stands firm above $1,800 over increasing virus fears and weaker dollar, Gold prices surge higher, Traders focus on U.S. Federal Reserve

Gold was up at Wednesday’s trading session, thanks to a weaker dollar coupled with statements from Janet Yellen, the incoming Secretary for the U.S Treasury, calling for more COVID-19 relief programs; these helped to push the yellow metal’s appeal up as an inflation hedge.

What you should know: At press time, Gold futures were up 0.51% at $1,849.60/ounce.

  • The Secretary of the Treasury nominee made key statements during her Senate confirmation hearing held yesterday, where she discussed the economic gains of a large stimulus package that would far outweigh the risk of a higher debt burden.
  • The greenback dropped for the third consecutive trading session after Janet Yellen said in her hearing that tax cuts enacted in 2017 for large companies should be reversed.

READ: Six largest tech stocks by market value lose more than $1 trillion in 3 days

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the odds that the precious metal currently has amid a relatively strong greenback.

“Maximum stimulus overdrive, favorable to bullion turnaround in taper talk and slightly weaker dollar paint an encouraging backdrop for gold prices provided real rates oblige.

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“Gold has been facing headwinds from a strong US dollar and higher real rates so far this year. The market is trying to hold the yellow metal above crucial support levels, which is encouraging,” Innes stated.

READ: Investors worry over future of Crypto under a Joe Biden Presidency

What to expect: However so far, gold has struggled to recover convincingly past the $1850 psychological level, and the 50dma around $1960 remains the ultimate target Q1 for gold bulls.

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