Author: rxchanellv

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Gold prices rise for a second session

Brent oil futures open Wednesday’s trading session hovering just over $100 a barrel as oil prices remain in a state of limbo, failing to find any clear direction whilst a stronger US dollar is helping to keep a lid on higher crude.

Latest Brent Oil Price

In London, ICE Brent crude oil futures for August 2013 delivery was trading at $100.76 a barrel, 07:49 GMT this morning on the ICE Futures Exchange. The contract closed off yesterday’s session at $101.20.

Stronger US Dollar

The US dollar has bounced higher in the last few days following the US Fed’s announcement that it may well bring an end to it’s QE program in 2014. As of this morning, the US Dollar Index, which tracks the US dollar against 6 major world currencies was at 82.870, nearly 2 percent higher than lows of early last week.

“There’s broad based dollar strength. People are rotating out of assets that they overreached for as the grab for yield unwinds. The dollar will be the beneficiary of people looking to unwind liquidity.” according to Brian Kim, a currency strategist at RBS Securities, Stamford, Connecticut.

Short term direction for both European Brent and US WTI crude oil prices will once again take some direction off the back of weekly data in the US from the EIA’s and API’s reports which monitor crude oil stockpiles for the United States, due out later today.

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Brent oil price hovers near $100 as stronger dollar holds back crude

The price of an ounce of gold moved higher this morning and is closing back near $1450 however the commodity remains at the mercy of market sentiment and a stronger US dollar which typically weighs on the precious metal.

Latest Gold Futures Price

In trading this morning an ounce of gold rose to $1446.50, or 1.5 percent higher but is still down more than 10 percent from the start of this month.

The US Dollar and Gold

The US dollar remains strong as shown by the Dollar Index levels holding near 83. Our view that the US dollar is set for an multi quarter period of relative strength against all the major currencies. Pullbacks could now be viewed as buying opportunities, and a daily close above the 83.50 level could well be in the cards very soon. A stronger dollar tends to weigh heavily on commodity prices, hence both crude oil and gold prices could see fall back lower in the coming days.

Buying Physical Gold

This months fall in gold prices has led people from all continents into buying physical gold on a massive scale, leading to reports of stocks running low or simply running out. And it doesn’t stop there. The world’s central banks are once again buying after the recent steep sell off in the precious metal.

Central bank purchases of gold and surging physical demand are helping gold prices bounce back from a two year trough near $1,321 an ounce hit last week according to gold dealers.

“People are actually buying everything, gold bars, gold coins. People are rushing to get a hand on it. We have a problem meeting the demand because we are unable to get new supply,” said Brian Lan, managing director of GoldSilver Central Pte Ltd, Singapore. “There’s a huge backlog. It’s the same for silver. So far sentiment seems to be improving. Even the price has more or less stabilised.”

“If the price breaks above $1,447-$1,450 levels, there will be more upward momentum. If it doesn’t, we may see a further dip in gold prices,” Phillip Futures investment analyst Joyce Liu said in Singapore.

Gold prices seem to be experiencing a short term correction during its long term secular bull market.

If you compare today’s gold bull run to the spectacular gold bull market in the 1970′s. From February 1975 to August 1976, gold prices fell a massive 44 percent. However, those investors who held tight to their gold were rewarded: From August 1976 to January 1980, gold rose an astounding 700 percent. As long as people are buying physical gold then this short dip in prices remains a chance to buy more.

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Gold price advances near $1450 but remains volatile to a stronger US dollar

Asian stocks generally gained as led by Japanese shares. The G-20 group on Friday acknowledged that the BOJ’s monetary stimulus was aimed at defeating deflation, not at weakening the yen. Japanese yen slumped, with USD/JPY hovering at 100 level. In the commodity sector, the front-month contract for WTI crude oil recovered modestly to 87.9/88.5 after the sharp decline last week, while the Brent crude contract steadied at 99.3/100.18 after slumping to as low as 96.75 last Thursday.

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Japanese Yen Weakens Further after G-20 Meeting

Financial Markets climbed higher yesterday amid relief that the Chinese government would be less likely to tighten monetary policy as inflation eased. Wall Street gained with the DJIA and the S&P 500 adding +0.41% and +0.35% respectively.

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Chinese Data Take Centre Stage

Disappointing US data sent stocks lower. Yet, treasuries rallied with the yield on the 10-year note dropping to around 1.8% as Fed Presidents Bullard and Williams and Fed Governor Tarullo indicated that there remained little chance in the near-term that the Fed would taper QE purchases.

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Disappointing ISM and Job Data Weakened Financial Markets

Strong US home price data lifted financial markets yesterday. This has upstaged concerns over Cypriot bailout plan. Wall Street soared with the DJIA and S&P 500 indices gaining +0.775 and +0.78% respectively.

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Financial Markets Lifted by Strong US Home Price Data

Both the IEA and the EIA released their oil demand forecasts. The former estimated oil demand to grow +0.82M bpd this year, down -0.02K bpd from last month’s forecast. The agency said that deterioration in Chinese business sentiment, European slowdown and US budget cuts would weigh on the demand for oil worldwide.

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IEA Lowered Global Oil Demand Growth Forecast for 2013

The price of NYMEX WTI crude oil may well come under more downward pressure this week as the US Dollar Index, the measure of strength in the American currency pushes higher back towards 81 levels.

Latest WTI Oil Price

US Light crude oil futures for March 2013 delivery was at $95.63 a barrel, whilst the US Dollar Index was up at 80.75. Brent crude edged up to $117.78 a barrel by 05:20 GMT after posting its first weekly loss since the first half of January.

Oil trading volumes are likely to be light today with US investors away for a public holiday.

In Asian trading Monday, EUR to USD fell 0.17 percent to 1.3341. The euro has been giving up recent gains against the greenback following data released last week that showed that euro zone GDP contracted by 0.6 percent in the three months to December.

Oil Price Spread WTI / Brent

The spread between European Brent and American WTI crude oil is now back to the $21 – $22 range, suggesting that oil supply concerns in the Middle East are still playing a big part in the premium Brent has over WTI.

Sanctions on Iran are still curbing supply from the third largest OPEC producer. Talks between Iran and major world powers on Tehran’s nuclear programme remained deadlocked and investors are looking ahead to another meeting on 26th February for any signs of progress.

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This article was written by: JR @ liveoilprices.co.uk

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WTI oil price may come under pressure this week on a higher US dollar

Commodities changed little in European session. Iran signaled it is likely to increase its oil production capacity to 5.2 million barrels per day by early 2016. At the upcoming OPEC meeting in December 12, the group would elect a new secretary-general but it is unexpected to change the production quota of 3M bpd.

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China’s Gold Market to Stay in Deficit through 2015