Connect with us
Paramount
Advertisement
Ican
Advertisement
IZIKJON
Advertisement
forex
Advertisement
Stanbic IBTC
Advertisement
Polaris bank
Advertisement
Binance
Advertisement
Esetech
Advertisement
Patricia
Advertisement
Fidelity ads
Advertisement
app

Commodities

Gold traders go wary over rising U.S. Treasury yields

Gold prices drifted slightly lower at the first trading session of the week after U.S. Treasury yields soared to their highest in nearly 11 months.

Published

on

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 slightly lower at the first trading session of the week after U.S. Treasury yields soared to their highest in nearly 11 months in the previous session.

At the time of drafting this report, spot gold was trading lower by 0.1% to $1,821.84 per ounce.

Gold traders are becoming increasingly wary as U.S. Treasury yields surged to their highest levels since March 2020 at the end of last week’s trading session, though U.S inflation expectations ticked up to a six-year high.

READ: Gold prices post gains on $1.9 trillion stimulus program

What you must 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.

Stephen Innes, Chief Global Market Strategist at Axi, gave further insights on the political macro condition that could determine the precious metal future, at least for the midterm knowing fully well that gold is priced in the U.S dollar.

READ: Gold prices drop lower, Gold traders await U.S. Federal Reserve

“Gold came close to breaking back below USD1,800/oz. A second break below that level this month would have 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 prices tumble over rising U.S dollar

Bottom Line

Gold traders are not keen on going long, at least for the near term, on the bias that rising U.S Treasury yields see investors showing less interest in the yellow metal.

bitcoin train

Binance

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.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Commodities

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.

Published

on

OPEC+ Alliance, US, Russia, Canada, Mexico reach historic deal to cut 13.4 million bpd, Oil market still uncertain over the OPEC+ deal as prices react positively, 7 oil producing countries most affected by covid-19, see where Nigeria is placed

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 Q1, with Saudi Arabia urging producers to remain “extremely cautious”.

Continue Reading

Commodities

Oil gains 15% in February, as Saudi Arabia’s output curbs help

Oil prices rose for a fourth straight month, despite its heavy plunge at the last trading session of the month.

Published

on

Crude oil prices, bonny light, 4 key reasons why Brent crude might slip back to $35 per barrel, Crude oil prices resume weekly gains as demand picks up 

Oil prices rose for a fourth straight month, despite their heavy plunge at the last trading session of the month.

British-based oil contract, Brent crude, which is the international benchmark for oil, settled at $64.42, down 3.7% on the day. For the week, it however rallied up by 2.5%. For the month, it was up 15%, extending gains in January, 9% in December, and 27% in November.

  • Brent crude also hit a 13-month high of $66.81 in February. Oil traders will now be looking at the all-important meeting led by the Organization of Petroleum Exporting Countries with allies steered by Russia, which is to meet in the coming days to set output quotas for April.
  • The Saudis had contributed massively in supporting crude oil prices last month when they pledged to make these extra curbs only this month and March, but some see signs that suggest a change in such status quo.

READ: Nigeria, other African oil-producing countries will lose $1tn oil revenue in 20 years – PWC

Saudi Arabia, the leading oil producer after the United States, is OPEC’s most important producer as it has proven reserves equivalent to 221.2 times its annual needs. This means that, without Net Exports, there would be about 221 years of oil left.

That said, OPEC has 70% of the world’s proved crude oil reserves. Venezuela leads the title for the highest crude oil reserves with 304 billion barrels, followed by Saudi Arabia with 298 billion barrels.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave insightful macros that could weigh on oil prices in the short term.

“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,” Innes stated.

What to expect

Still, oil traders anticipate such corrections are likely to be short-lived given evidence of an ongoing demand rebound and the likelihood that oil markets remain tight this year.

Continue Reading
Advertisement




Advertisement

Nairametrics | Company Earnings