As injects $1 trillion
As the world continued to battle with dwindling economy due to COVID-19 Pandemic, recent reports have it that Crude oil has recorded more gains at London’s trading session.
Analysts say this is not unconnected with the news about the U.S Congress’ $1 trillion stimulus bill to helped strengthened the US dollar and also support crude oil prices.
Another report elsewhere has it that gold loses $70 in an hour in one day.
The report further stated that Brent crude gained 0.30% to $43.69 as of 8: 20 AM GMT, even as West Texas Intermediate also gain 0.24% to $41.71, thereby reversing some losses recorded recently.
Stephen Innes, the Chief Global Market Strategist at AxiCorp, in a note to Newsmen explained the favorable macros, that will help continue to boost global oil prices in the short term.
In his words: “Oil markets are receiving support from expectations of the FOMC’s firmer commitment in the upcoming policy meeting towards allowing above-target inflation to occur for some time, which should be viewed as incredibly positive for risk assets.
“Crude oil continues to sit in narrow well-worn trading ranges as traded volumes fall into the summer. Ultimately something will shake the trees and knock us out of the range trade syndrome.”
He noted however that in order for crude oil prices to break out higher, there must be a significant flattening of COVID-19 caseloads around the world. Still, besides staying nervous over the absolute number of COVID-19 case counts globally, most traders have one eye trained on the US supply, as the first weekly increase in the US rig count could be a sign of things to come.
Gold has lost about $70 after setting a new price record of $2,000 an ounce just a few hours ago at London’s trading session. This happened as market volatility in the precious metal market went bizarre.
At about 6.12 GMT, gold futures were trading at around $1930 per ounce.
Gold lost about $70 dollars within an hour because gold bulls got exhausted following the sudden price jump to $2000. In other words, gold traders pulled back momentarily, partly due to the fact that the U.S dollar regained some strength, thereby limiting gold’s rapid upside.
In the meantime, it appears that investors are still uncertain about which direction gold is heading. This has led to gold traders pulling back some of their long positions. Note that if global stimulus packages do not get withdrawn at some point, the world’s economy might suffer from a financial asset bubble.
Meanwhile, Stephen Innes, the Chief Global Market Strategist at AxiCorp, gave Our Reporter some insights regarding the drivers pushing gold to new record highs. He said:
“Gold is jumping in Asian trading hours again and is taking the rest of the precious metals complex higher. The latest surge in demand out of China suggests gold could easily break $2000, maybe even by the end of the week.”
Stephen Innes also gave an account of the U.S dollar weakness which had been helping to buoy the value of gold upward. He said:
“US-China relationship strains further; concerns about inflation as oil prices firm up alongside the broad U.S. dollar weakness which has gathered up speed and all of which makes for a perfect complimentary basket of drivers to push gold higher.”
The rush for gold by global investors had been boosted by a weakened greenback, which fell to the lowest point in over a year, on hopes that the Federal Reserve will continue to stimulate the world’s largest economy when it convenes this week.
