The yellow metal rebounded strongly in the last two trading sessions of the week.
The strong rebound in the precious metal market is largely attributed to the new COVID-19 pandemic-related restrictions taking its stronghold globally and stock markets in the United States coming under immense pressure from such prevailing macro.
- At the time of writing this publication, Gold futures were rallying around $1,871/ounce.
Against all odds, there seem to be high hopes on the yellow metal heading towards the $1,900 mark again, partly because there are credible reports pointing towards a new wave of quantitative easing coming from the world’s biggest economy, in order to support the fragile economy.
- Such prospects for more monetary bailout pushed gold gain 3.3% last week, rebounding from a 5% drop the week before.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, gave a well-detailed report to Nairametrics on the prevailing macros weighing on investors’ minds, as regards COVID-19.
Innes said, “Investors are adopting an all too familiar stance trying to weigh near-term COVID-19-related headwinds vs a better long-term vaccine and stimulus-related outlook.
“But something to think about when it comes to COVID-19 vaccines is the take-up from the general public, which is something The Wall Street Journal looks at today. It cites two recent surveys that suggest a fair amount of scepticism in Europe towards the vaccine. A poll in November from the University of Hamburg showed those hesitant or unwilling to take the vaccine were at around 40% across seven European countries.
“An Ipsos poll taken in early October found that almost one-third of Japanese and nearly 50% of French respondents also said they wouldn’t get vaccinated.
“The Ipsos poll put the primary reason down to concerns over how the vaccine was developed. Keeping in mind vaccines doesn’t help the economy recover, but vaccinations do.”
Gold traders are pinning their hopes that the precious metal would stay above the $1,850 price level at least for the near term, as week’s softer than expected US Job report might have injected some urgency into US fiscal negotiations.
Oil prices stay on course over successful rollout of COVID-19 vaccines
The British-based oil contract, Brent crude surged by 0.46%, to trade at $62.99 a barrel, up from four days of losses.
Crude oil prices recorded early gains at the third trading session of the week. Oil traders are riding, on high hopes on progress made by COVID-19 vaccine rollouts in the world’s largest economy.
At the time of drafting this report, U.S. West Texas Intermediate (WTI) crude futures gained 0.3%, to $59.93 a barrel, partly recovering from the week losses.
Also the British-based oil contract, Brent crude surged by 0.46%, to trade at $62.99 a barrel, up from four days of losses.
However, it’s fair to say the bulls were not yet in full control as recent price action suggested capped gains.
Some oil pundits anticipate energy demand recovery is on the right track partly to the successful rollouts of COVID-19 vaccines at emerged markets.
That being said, Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the rising oil stockpiles at the world’s largest economy, keeping oil bulls far from holding their grip,
“U.S oil stockpiles rose last week and product inventories fell sharply in a cause and effect of the cold snap that forced refiners to shut down Texas operations.
“The unexpectedly large crude inventories build hit at a worrying time for oil bulls. This is particularly significant on the rising possibility that OPEC major oil producers could agree to ease production cuts at a critical meeting this week amid concerns that demand will likely outstrip supply as the global vaccine-led recovery gathers a head of steam,” Innes said.
What to expect: Oil traders are anxiously waiting for Thursday’s OPEC+ meeting. It appears to represent some overdue caution going into the OPEC+ meeting as market participants continue to draw straws and attempt to gauge the likely rise in production.
Oil prices plunge on fears OPEC+ may increase Oil supply
Oil traders are becoming wary that OPEC+ will increase oil output and further distort the energy demand/supply dynamics.
Oil prices lost more than a percent at the second trading session of the week. Oil traders are virtually going to extend short on concern that OPEC may agree to increase global supply in a meeting this week and Chinese demand may be dropping.
At the time of writing this report, Brent crude dropped by 1.2%, to trade at $62.91 after losing 1.1% in the past day. U.S. West Texas Intermediate (WTI) crude dropped by 1.2%, to trade at$59.90 a barrel, having lost 1.4% on Monday.
Oil traders are becoming wary that OPEC and its allies, a group often referred to as OPEC+, will increase oil output and further distort the energy demand/supply dynamics.
The group meets is scheduled to hold on Thursday as discussions might include allowing as much as 1.5 million barrels per day of crude oil back into the market.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics explained why the OPEC+ meeting matters most to many oil traders.
“Constructive oil market fundamentals have blown slightly off course ahead of the OPEC + meeting on Thursday as oil prices took to the plunge pool overnight, with Brent back to the soft US$63 handle after trading as high as $66.82 only last Thursday.
“Commodities were mostly weak overnight as the dollar regained a bit of ground. OPEC+ will meet this Thursday, and expectations are that despite Saudi Arabia’s call for caution, most members will push for an increase in output,” Innes stated.
Bottom line: energy pundits expect the all-important meeting this week in being one of the most interesting oil meetings in recent times, with Saudi Arabia urging producers to remain “extremely cautious”.
Nairametrics | Company Earnings
- FY 2020: Africa Prudential posts N1.45 billion Profit After Tax.
Africa Prudential Plc released its […]
- Custodian Investment Plc posts N12.69 billion profit in FY 2020.
- 2020 FY Results: Nestle posts N39.2 billion, as earnings per share prints N49.47
Nestle Nigeria Plc released its audited […]
- 2020 FY: WEMA Bank posts N5.06 billion profit after tax as earnings per share prints at N13.1.
Wema Bank Plc released […]
- 2020 FY: Zenith Bank post N230.6 billion profit after tax
Zenith Bank Plc released its […]