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Commodities

Gold prices drop on U.S. Senate run-off elections

Gold futures dropped about 0.33% to trade at $1,947.

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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 drifted lower at mid week’s trading session.

Traders are going short partly on awaited results of the U.S. Senate runoff election and gauging the prospects of further quantitative easing programs.

What you should know: At the time of writing this report, gold futures dropped about 0.33% to trade at $1,947.

Votes are presently being counted in the Georgia election, where two U.S Senate seats are up for grabs.

READ: Gold prices up amid poor U.S Jobs data report

Specta

What this means: Traders are focusing on the outcome of such election results on the bias that it will determine which party will have control of the upper chamber in the U.S congress, and the ease with which President-elect Joe Biden can move his legislative agenda through.

READ: Gold prices rally high, gains 3% on U.S dollar drop

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the political macros weighing on gold prices:

 “Gold is in a holding pattern ahead of Georgia runoff results.

READ: Oil prices fall, Oil traders edgy on rising COVID-19 cases

“Gold continues to trade on the front foot after a roaring start to 2021 for TIPS, which outperformed about everything on Monday and reached new highs.

“It feels like there was a wave of last-ditch efforts effort to have the ‘blue wave’ trade on ahead of a Topsy Turvy Tuesday Senate election runoff in Georgia.”

READ: Afreximbank invests over $500m in the maritime industry in 3 years 

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What to expect: gold traders are anticipating a pause in action today until the election results are released as any disappointment (i.e., no blue wave) there could cause some pullback. However, with a long end of the curve firmly supported by the reflation narrative, gold could remain well supported on dips.

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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

Oil prices stay resilient amid pressure from COVID-19

Oil prices rallied after industry data showed U.S. crude inventories dropped unexpectedly last week amid fears that the COVID-19 infection,

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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 rallied at the mid-week trading session after industry data showed that U.S. crude inventories dropped unexpectedly last week amid fears that the COVID-19 infection rates were getting out of control.

  • U.S. West Texas Intermediate (WTI) rose 0.2%, to trade at $52.71 a barrel, reversing some of yesterday’s loss.
  • Brent crude oil futures rallied by 0.2% to $56.02 a barrel.

What this means: Recent data retrieved from the American Petroleum Institute (API) showed crude oil inventories in the world’s biggest oil consumer, dropped by 5.3 million barrels in the week to Jan. 22 compared with analysts’ expectations in a Reuters poll for a build of 430,000 barrels.

China’s National Health Commission revealed that the world’s largest importer of oil recorded 124 cases on Jan. 24, up from 80 earlier, which is the worst wave of new COVID-19 infections seen since March 2020.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing macros helping oil prices though other reports reveal that oil would remain under pressure amid energy demand/supply rebalancing;

“Oil received a timely fillip after the API reported that US crude supplies declined 5.3 million barrels bullishly against consensuses.

Specta

“But problems may continue to linger under the hood as the data also reportedly indicated gasoline stock rose by near 3.1 million barrels. At the same time, the draws at Cushing make sense in backwardation markets.

“Even when mired in the pandemic’s darkest days, oil prices remain incredibly resilient in no small part due to OPEC’s dogged determination to stay in damage control mode adjusting supply constraints to alleviate the currently projected level of attrition to global demand.”

What to expect: While the general upward direction of travel in the market makes sense, it’s difficult for oil traders to make a definitive near-term shift to the next price level higher, given the very uncertain near-term demand outlook.

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Commodities

Gold traders remain cautious despite urgency in $1.9 trillion stimulus plan

Gold traders are of the bias that the precious market is heading from neutral to bearish…

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gold, Gold fast losing the battle to Bitcoin

Gold prices at Tuesday’s trading session moved slightly higher, despite the White House’s recent statement that there’s an “urgency” to passing the $1.9 trillion stimulus plan.

What you should know: At press time, gold futures were trading at around $1860/ounce.

Gold bug’s upside this week seems to be curbed in spite of its surge last week when it rose more than $26, or 1.4%, after losing almost 3.5% in two previous weeks combined.

READ: Gold prices drop on U.S. Senate run-off elections

  • Gold traders are of the bias that the precious metal’s market is heading from neutral to bearish as recent price action reveal the potential head and shoulders chart pattern continues to form on the daily charts, and energy is building during consolidation.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke in detail on macros that could put gold prices upside limited at least for the near term:

Specta

“Gold conceded ground to stronger dollar overnight but remains bid against escalating US-China tensions over Taiwan. Gold is struggling to break out. Most short-term fundamentals suggest upside from here, but extended speculative positioning is acting as a drag.

READ: Present day cryptos won’t last long – Bank of England

“We will see what progress is made on the US USD1.9 trillion fiscal stimulus package during the remainder of the week. Presumably, the smoother it passes, the more favorable for gold.”

What to expect: On the central bank front, the highlight is the FOMC decision. The FOMC meeting should be gold supportive, but not new news. Robust GDP data could weigh on gold if yields react higher.

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Commodities

Oil prices fall under pressure over rising number of COVID-19 cases in China

Brent crude was down by 0.24% to trade at $55.12 barrel, and WTI futures inched down by 0.10% to $52.22 a barrel.

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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

Oil prices drifted lower at the first trading session in London, recording a second consecutive trading session of losses, as the ever-rising number of COVID-19 cases, particularly in China, raise energy demand fears.

What you should know: At the time of writing this report, Brent crude was down by 0.24% to trade at $55.12 barrel, and West Texas Intermediate futures inched down by 0.10% to $52.22 a barrel.

China’s National Health Commission revealed that the world’s largest importer of oil recorded 124 cases on Jan. 24, up from 80 earlier, which is the worst wave of new COVID-19 infections seen since March 2020.

READ: COVID-19 mutant strain causes chaos at Oil markets

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on current fundamentals weighing on oil prices, at least for the near term. In addition, he spoke on how the COVID-19 pandemic seemed to distort the bullish rally.

Specta

“The Lunar New Year headline heebie-jeebies did a number on oil prices into weeks end. Yet after hitting an intraday low US$54.48 per barrel, Brent crude managed to close above US$55 despite the clear demand impacts of lockdowns in Europe and additional measures in China.

READ: Oil traders weigh if COVID-19 support programs will buoy economic growth

The enormous question mark remains around demand and supply.

  • The street uniformly downgraded Q1 21 market in the world ex-China due to clear demand impacts of lockdowns in Europe to start the year. But last week it was back to the downward demand revision drawing board.
  • More worryingly, however, since Asia has been the backbone of physical crude oil demand, this time it was to down-ballot China consumption as lockdowns spread in the country just weeks ahead of the Lunar New Year travel surge.”

READ: Young Nigerians share their experiences on the cost of working from home

What to expect: Still, the one million barrels per day of additional Saudi curbs over February and March should alleviate the currently projected level of attrition in global demand recovery without much impact on the path of OECD inventory draws.

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