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Oil and Gold Fundamental Outlook
Tuesday, 03 March 2009 22:11:15 GMT
Written by Stefan Tifigiu, CFDTrading Research
Despite deepening negative sentiment, Crude Oil prices gained today on expectations of supply reductions. Gold prices continued their downward trend today despite continually negative outlook for the global economy. While the economic outlook remains downbeat, several forces may be contributing to gold’s sell-off.
Commodities - Energy
Oil Gains on Production Cut Expectations
Crude Oil (WTI) $41.20 +1.050 +2.57%
Despite deepening negative sentiment, Crude Oil prices gained today on expectations of supply reductions. Several OPEC members stepped up hawkish supply-cut rhetoric in the face of sharp price declines. It seems that demand and supply forces will be battling it out in deciding the price of crude for the coming sessions. The question is: which of the two will have more influence? On the one hand, demand destruction continues to exert strong downward pressure on crude prices. If recent bearish releases are any indication, the world economy will likely remain stagnant or continue to contract for some time. Barring any unexpected reversal in global economic trends, demand destruction will maintain a strong influence on prices. On the other hand, cuts from a number of suppliers can help prop up crude prices at their current levels. OPEC and major corporations such as Royal Dutch Shell plan on reducing production in response to falling prices. How much these reductions will lower supply is questionable given several of the OPEC members’ budgetary constraints. Some members have already expressed concerns over other nations failing to fully comply with reductions. That being said, if tommorow’s DOE figures indicate a steeper reduction in supplies, this will provide support for current prices. Otherwise, crude prices will likely fall again.
Commodities - Metals
Equities Reach Attractive Levels, Speculative Funds May Be Moving
Gold $915.275 -$10.075 -1.13%
Gold prices continued their downward trend today despite continually negative outlook for the global economy. While the economic outlook remains downbeat, several forces may be contributing to gold’s selloff. Some value-investors consider currentprices of equities to be exceptional bargains at current levels as many securities have fallen to decade lows. In response to this, some speculative funds may have begun to transfer from safe-havens toward equities, however equities markets are not particularly indicative of this. Most of the price action may be more readily attributed to traders deleveraging positionsby selling off on profits acquired through the safe-haven. Negative market sentiment continues to remain a major influence on the markets, however resistance was demonstrated as even extremely bearish comments by Fed Chairman Ben Bernanke could not spark up the metal’s demand. Given the outflows by speculative funds and competition from other safe-havens such as government bonds and the US Dollar, Gold prices may stall for the short-term. Favorable conditions for a mid-term to long-term rally however are in place but until short-term pressures subside, gold will likely trade flat.
Silver $12.800 -$0.140 -1.08%
Negative market sentiment continues to remain a major force in the markets, but so long as Gold experiences downward pressure, Silver will likely follow suit. Long-term the environment remains favorable for a future rally. Silver has historically lagged behind Gold’s gains and when demand begins to pick up again will likely grow at a very quick rate.
CFDTrading provides news on the economic reports and political events that influence the CFD traders.
Tuesday, 03 March 2009 22:11:15 GMT
Written by Stefan Tifigiu, CFDTrading Research
Despite deepening negative sentiment, Crude Oil prices gained today on expectations of supply reductions. Gold prices continued their downward trend today despite continually negative outlook for the global economy. While the economic outlook remains downbeat, several forces may be contributing to gold’s sell-off.
Commodities - Energy
Oil Gains on Production Cut Expectations
Crude Oil (WTI) $41.20 +1.050 +2.57%
Despite deepening negative sentiment, Crude Oil prices gained today on expectations of supply reductions. Several OPEC members stepped up hawkish supply-cut rhetoric in the face of sharp price declines. It seems that demand and supply forces will be battling it out in deciding the price of crude for the coming sessions. The question is: which of the two will have more influence? On the one hand, demand destruction continues to exert strong downward pressure on crude prices. If recent bearish releases are any indication, the world economy will likely remain stagnant or continue to contract for some time. Barring any unexpected reversal in global economic trends, demand destruction will maintain a strong influence on prices. On the other hand, cuts from a number of suppliers can help prop up crude prices at their current levels. OPEC and major corporations such as Royal Dutch Shell plan on reducing production in response to falling prices. How much these reductions will lower supply is questionable given several of the OPEC members’ budgetary constraints. Some members have already expressed concerns over other nations failing to fully comply with reductions. That being said, if tommorow’s DOE figures indicate a steeper reduction in supplies, this will provide support for current prices. Otherwise, crude prices will likely fall again.
Commodities - Metals
Equities Reach Attractive Levels, Speculative Funds May Be Moving
Gold $915.275 -$10.075 -1.13%
Gold prices continued their downward trend today despite continually negative outlook for the global economy. While the economic outlook remains downbeat, several forces may be contributing to gold’s selloff. Some value-investors consider currentprices of equities to be exceptional bargains at current levels as many securities have fallen to decade lows. In response to this, some speculative funds may have begun to transfer from safe-havens toward equities, however equities markets are not particularly indicative of this. Most of the price action may be more readily attributed to traders deleveraging positionsby selling off on profits acquired through the safe-haven. Negative market sentiment continues to remain a major influence on the markets, however resistance was demonstrated as even extremely bearish comments by Fed Chairman Ben Bernanke could not spark up the metal’s demand. Given the outflows by speculative funds and competition from other safe-havens such as government bonds and the US Dollar, Gold prices may stall for the short-term. Favorable conditions for a mid-term to long-term rally however are in place but until short-term pressures subside, gold will likely trade flat.
Silver $12.800 -$0.140 -1.08%
Negative market sentiment continues to remain a major force in the markets, but so long as Gold experiences downward pressure, Silver will likely follow suit. Long-term the environment remains favorable for a future rally. Silver has historically lagged behind Gold’s gains and when demand begins to pick up again will likely grow at a very quick rate.
CFDTrading provides news on the economic reports and political events that influence the CFD traders.