Connect with us

Commodities

Weak Growth Outlook, Iran Sanctions Bring Volatility to Oil Markets

Published

on

Oil prices were under pressure on Wednesday, as traders grappled with the International Monetary Fund’s murky outlook on global economic growth.

Oil Price Update

Crude prices were down across the board midweek, with U.S. and international futures benchmark trekking lower. The U.S. West Texas Intermediate (WTI) benchmark fell $1.67, or 2.2%, to $73.29 a barrel on the New York Mercantile Exchange. Brent crude was down $1.62, or 1.9%, to $83.38 a barrel.

Despite the recent drop, prices will likely rebound in the near term as the Gulf of Mexico braces for Hurricane Michael, which is currently a Category 4 storm. Current forecasts suggest that the storm will miss the main production areas in the region, though major disruptions to economic activity are expected.

IMF Downgrades Global Growth Outlook

U.S.-China trade tensions and rising import duties are beginning to affect the global economy, according to the International Monetary Fund. The Washington-based lending institution this week lowered its outlook on global economic growth in the next few years, citing several risks to commerce.

The United States and China – the world’s two largest economies – saw their growth outlook slashed next year. IMF officials now expect the U.S. economy to expand 2.5% next year, down 0.2 percentage point from the previous estimate. Meanwhile, China’s GDP growth is forecast to slow to 6.2% in 2019 from 6.6% this year. That also reflects a 0.2 percentage point drop from the prior estimate.

“The impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies,” the IMF said in its latest outlook. “An intensification of trade tensions, and the associated rise in policy uncertainty, could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade.”

The fund now projects global growth to be 3.7% in 2019, down from 3.9%. Officials also predicted a downward trend in 2020 and beyond.

Extreme Volatility

BP’s chief executive has warned of “extreme volatility” in oil prices emanating from the resumption of U.S. sanctions on Iran. In a recent interview with CNBC, Bob Dudley said his firm is preparing for “45 days of extreme volatility” in the market where prices can go either way.

Dudley’s comments reflect wider concerns over the impact of Iran sanctions on global crude supplies. Exports from the Islamic Republic declined to 1.1 million barrels in the first week of October, down from 1.6 million in September, according to industry sources. Iran shipped as much as 2.6 million barrels per day in April.  Sanctions against the country’s oil industry will come into force Nov. 4, 2018.

Analysts warn that U.S. sanctions against Tehran could keep oil prices artificially high. Crude is expected to stay above $65 a barrel in the intermediate term and possibly returning to $100 by next year.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




Feedback or Requests?

Commodities

Gold Price: Chinese Lunar New Year Stokes Buying Frenzy

Published

on

Gold notched fresh ten-month highs Wednesday and was on track for its third consecutive session in the green as physical demand from China provided another catalyst for the buying frenzy.

Bullion Approaches $1,350

Gold for April delivery reached a high of $1,349.80 a troy ounce on the Comex division of the New York Mercantile Exchange. That was the highest since last April. At the time of writing, the yellow metal was trading at $1,346.10 a troy ounce, where it gained $1.30, or 0.1%.

Bullion’s rally moderated at the start of February but has since come back stronger. Prices are up 3% since Feb. 11.

Further reading: Gold Rush Continues as Bullion Tops $1,340 for the First Time Since April

March silver futures rose 6 cents, or 0.5%, to $16.03 a troy ounce. The platinum spot price surged $8.84, or 1.1%, to $828.49 a pound.

Chinese Demand

Precious metals are seeing higher demand not just from traders, but consumers as well. The latest buying frenzy came on the heels of Chinese’s recent Lunar New Year celebrations, which culminated in the first week of February. The week-long celebration is known to trigger high demand for jewelry.

That was the key takeaway from the latest weekly report from Metals Focus. Analysts at the British research firm issued the following statement regarding China and the gold rally (as quoted by Kitco):

“Some manufacturers we talked to said they have received healthy stock replenishment orders, since business reopened on 11th February, while others expect retailers to return after the Lantern Festival (19th February). This lends more confidence to our forecast that the Chinese jewelry market will enjoy further modest y/y growth in 2019.”

Large orders ahead of the holiday allowed the firm to reiterate its forecast for a 3% rise in Chinese jewelry demand this year. That follows a similar increase in 2018.

China is at the center of an ongoing trade dispute with the United States that has threatened to not only undermine global economic growth, but the price of gold as well. China remains heavily dependent on exports to sustain its economy and any disruption in trade flows could hasten an economic cooldown that began more than five years ago.

Beijing has sent an envoy to Washington to continue negotiating a new trade agreement. Both sides have until March 1 to reach a new agreement before tariffs on Chinese imports are reapplied. However, President Trump has expressed willingness to let the deadline “slide” if both sides made enough progress in their talks.

Featured image courtesy of Shutterstock. Chart via Barchart.com.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




Feedback or Requests?

Continue Reading

Commodities

Gold Rush Continues as Bullion Tops $1,340 for the First Time Since April

Published

on

Gold’s relentless push higher continued on Tuesday, as the yellow metal topped $1,340.00 a troy ounce for the first time in over ten months.

Market Update

Gold for April delivery surged $18.40, or 1.4%, to $1,340.50 a troy ounce on the Comex division of the New York Mercantile Exchange where it was eyeing its highest settlement since Apr. 19, 2018. Bullion has gained in back-to-back sessions and three of the past four days.

The yellow metal has rallied 4.6% in 2019 and 12% since the fourth quarter began.

Silver futures also produced solid results on Tuesday. The March futures contract rallied 18 cents, or 1.2%, to $15.93 a troy ounce. That’s the highest in almost three weeks.

Precious metals are being propped up by a declining U.S. dollar, which is currently mired in a four-day slump. The U.S. dollar index (DXY), which tracks the performance of the greenback against a basket of six peers, fell 0.2% to 96.70. Since peaking at two-month highs, the greenback has lost 0.4%.

Can’t Stop Gold: Yellow Metal Notches Ten-Month High Despite Improved Risk Sentiment

Markets Await Data Flow

A somber mood on Wall Street and in Europe may have also contributed to the rally on Tuesday as investors shifted their attention to macroeconomic data from key markets. The large-cap S&P 500 Index was trading flat by mid-morning. European markets were all lower. That being said, gold’s recent performance has been largely uncorrelated with stocks and other risk-on assets.

The Federal Reserve will release the minutes of its latest policy meeting on Wednesday. Central bankers voted to keep interest rates on hold last month and signaled dovish turn in their forward guidance. The prevailing view for now is that the Fed will not raise interest rates in 2019. Some analysts believe the central bank is more likely to cut rates before raising them again.

A steady stream of PMI data for European and U.S. markets are scheduled for the latter half of the week. On Thursday, the U.S. Department of Commerce will report on durable goods orders, a key proxy for factory demand.

Central-bank speeches from the Fed and European Central Bank will make headlines on Friday. In the same session, Germany will report on fourth-quarter GDP. The European Commission will also release its revised consumer inflation report for January.

Featured image courtesy of Shutterstock. Chart via Barchart.com.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




Feedback or Requests?

Continue Reading

Commodities

Can’t Stop Gold: Yellow Metal Notches Ten-Month High Despite Improved Risk Sentiment

Published

on

Gold prices rallied sharply on Monday, as the yellow metal shrugged off traditional headwinds including rising bond yields and improved risk appetite en route to fresh ten-month highs.

Price Update

Gold for April delivery climbed $7.70, or 0.6%, to $1,329.80 a troy ounce, its highest level since April on the New York Mercantile Exchange. The contract traded as high as $1,330.80 a troy ounce.

Bullion has been riding a wave of momentum since the fourth quarter began, as a worsening stock-market outlook and global trade tensions weighed on risk sentiment. Since the beginning of October, the yellow metal has rallied nearly 12%.

Silver has followed a similar trajectory as gold. On Monday, the grey metal edged up 5 cents, or 0.3%, to $15.79 a troy ounce. Silver futures peaked at seven-month highs last week.

The gold-silver ratio that is used by investors to determine when to buy and sell precious metals is moving in gold’s favor amid the recent wave of buying. As of Sunday, the ratio stood at 83.83. This basically means that 83.83 ounces of silver are needed to buy one ounce of gold.

Dollar Demand Ebbs

Gold’s ascent on Monday came as demand for the U.S. dollar continued to slide. Since peaking at near two-month highs, the dollar index (DXY) has declined in each of the past three sessions. On Monday, it was down a further 0.2% at 96.71.

The dollar bulls have been in the driver’s seat for the past two weeks, as global trade uncertainty and political turmoil in Europe weakened demand for competitor currencies. A synchronized slowdown in the global economy, particularly in Japan, China and the Eurozone, has also propped up the dollar relative to its peers.

Gold outperformed riskier assets during the fourth quarter and has retained its strength during the stock-market rebound of 2019. The dollar emerged as the haven asset of choice for investors fleeing global economic and political risks. With the U.S. and China making progress on a new trade agreement, stock traders have been able to breathe a collective sigh of relief. Read more: Stocks Surge on U.S.-China Trade Optimism; Dow Notches Eighth Consecutive Weekly Gain

The U.S. financial markets were closed on Monday for President’s Day. Despite their recent strong performance, stocks may struggle to keep the momentum alive as the S&P 500 Index approaches a key resistance level. The outlook on earnings has also deteriorated, presenting new complications for equity traders.

Additional insights: Does this Chart Spell Doom for the S&P 500 Index?

Featured image courtesy of Shutterstock. Chart via Barchart.com.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




Feedback or Requests?

Continue Reading

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending