Commodities
Gold post first weekly gains in four amid soaring U.S Treasury yields
It was the first positive week for the yellow metal after three prior weeks of losses that left buyers of the precious metal 8% poorer.
The precious metal recorded its first weekly profit in four jumping from under $1,700 an ounce, despite a 13-month surge in U.S. bond yields and a soaring U.S dollar that should have tamed the yellow metal’s upside.
Gold futures prices settled at 0.2% higher, to close at $1,719.80 an ounce after plunging earlier to $1,696.65 an ounce.
For the week, the precious metal’s contract surged by 1.3%. It was the first positive week for the yellow metal after three prior weeks of losses that left buyers of the precious metal 8% poorer.
READ: Gold’s appeal up thanks to a weaker U.S dollar
Market pundits are however surprised at gold’s sudden turn around amid fired-up U.S yields benchmarked rallying to 1.64%, their highest since 13 months ago.
Stephen Innes, Chief Global Market Strategist at Axi in an email sent to Nairametrics spoke on the macros affecting gold prices arbitrarily;
“The gold price may have found a floor here and will be comfortable for a bit. But if US yields start to break new ground or the FOMC surprises by hinting at taper (25 % chance), it could be lights out above $1700.
“If you don’t think the US economy will surge and 10-year yields won’t rise to 1.85-2.25% as predicted by Wall street, certainly buy gold and lots of it. But really, you are swimming against the current on this one, I’m afraid.”
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Bottom-line: Market sentiments suggest that the yellow metal price may have found a floor thus it could be comfortable in the $1700s range, at least for the near term as physical demand remains stout
Commodities
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.
At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.
READ: Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station
The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;
“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.
READ: Did OPEC+ April fool the oil market?
But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.
Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”
What to expect
Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.
Commodities
Oil prices stay on course as Saudi’s Energy Minister reassures traders
British based oil contract traded at about $63 a barrel while the WTI futures were trading slightly below the $60 price level.
Crude oil prices remained relatively firm at the early hours of Friday’s trading session as oil traders digested Saudi Arabia’s defense of OPEC+ plans in raising output thereby capping gains.
At press time, the British based oil contract traded at about $63 a barrel while the West Texas Intermediate futures were trading slightly below the $60 price level.
Saudi energy minister Prince Abdulaziz bin Salman recently revealed that there were no pressing concerns of demand/supply dynamics changing gear amid the gradual boost in outputs in an interview aired on Thursday, adding that OPEC+ had all ammunition put in place to change course if necessary. OPEC+ will continue to meet monthly on reviewing the energy market supply dynamics.
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Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the prevailing market sentiment amid macros pointing to more oil supplies hitting the sensitive energy market and an upsurge in COVID-19 caseloads.
“Positioning is much cleaner, although the market remains directionally long oil. However, the sudden calm and drop in volatility have attracted passive investors back to the fray as the market structure around prompt spreads start to tighten and the dollar begins to roll over.
“Still, the conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers in India plus parts of Canada as well as Tokyo backtracking into the lockdown Abyss, together with reports linking the UK’s Covid-19 vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay.”
READ: Did OPEC+ April fool the oil market?
What to expect: The most recent OPEC+ agreement on releasing barrels into such present demand was not out of place – suggesting the futuristic price of oil might range between the $60 -$70 price levels with production normalization vs current high excess production capacity taken into consideration.
