Investing.com – Driven by promises of free-flowing stimulant vaccines, both oil and gold had a crushing week and joined record highs on Wall Street in anticipation that the coronavirus pandemic will end well for the markets.
In a dichotomy to the daily heights of COVID-19 hospital stays and the worst of the nine-month pandemic, markets have had a surreal celebration of risk. Investors are investing in the house that the social restructuring the world has experienced since March will be reversed in the coming months when vaccines and medicines finally take responsibility.
For oil, the driver has been plenty of good news on Pfizer (NYSE :), Modern (NASDAQ 🙂 and AstraZeneca (NASDAQ 🙂 vaccine schedules. Despite some hiccups here and there – especially Pfizer’s halving of the doses it could deliver at the turn of the year – all ended at the peak time on Friday.
For crude oil itself, the stakes are that a barrel will end 2020 by over $ 50 on average – London’s Brent almost got there on Friday – and some believe it could go higher.
Even with a slew of vaccine news, the oil market seems to be at the heart of OPEC’s admirable discipline of production in times like this – agreeing on a half-million-barrel increase instead of a two-million-dollar hope originally feared.
To increase the risk, President Joe Biden on Friday announced that several – not one – stimulus of “hundreds of billions of dollars” will be needed to power the US economy until 2021. Senate Republicans, who did their best to alleviate large Covid -19 related spending after the first $ 3 trillion approved under the Coronavirus Aid, Relief and Economic Security (CARES) Act in March, see corner to agree that at least one bipartisan deal of $ 908 comes down the pipe first.
In addition to what the Biden administration is doing, the Federal Reserve is also planning a deep dive into bond purchases after seeing November’s worrying non-farm wages show that only 245,000 jobs were added versus expectations of a 470,000 profit.
“COVID barriers and restrictive measures risk permanent scarring in the labor market and it will keep the Fed ultra-accommodating,” said Ed Moya, senior marketing strategist at OANDA in New York, on Friday.
Despite all this, some volatility in oil is expected in the future.
“It would be naive for traders, even the most technically inclined, to ignore the ongoing traction between the global economic recovery and the deficit in demand for oil supply, which remains the prevailing overarching theme governing energy markets,” Christopher Vecchio, senior strategist at Daily FX, said in a blog last week.
“We thus stick to our basic forecast for Q3’20 and Q4’20 as we approach the end of 2020, which required crude oil prices to stay between $ 35 and $ 50 per barrel.”
When it comes to gold, there are arguments as to whether it has hit a wall between $ 1,835 and $ 1,850, after rallying hard from under $ 1,770.
The most optimistic case for the yellow metal now is a break to $ 1,880 and above. For this, much will depend on how the refugee mass buys the stimulus story from the Biden camp and whether Republicans can resist the Democrats’ dominance in Congress.
In addition, two other things must hold down for gold to go higher: the one – which is already on the multi-year low – and
If an asset rotation suddenly happens, money can escape overbought stocks – including gold – to go into bonds instead.
“Gold’s body language shows its willingness to cross in on the right side of $ 1,900, but at the same time, technical factors require caution,” said Sunil Kumar Dixit of Kolkata, India-based SK Dixit Charting.
As expected, the precious metal withstands strong resistance at $ 1,848 and Stochastic RSI (Relative Strength Indicator) negativity may cause some intraday correction to $ 1,830- $ 1,818. Buyers can enter the test of $ 1,818- $ 1,820 ranges and a consolidation can help gold rally again, break $ 1,848 and reach $ 1,866- $ 1,870. “
Crude prices reached nine-month highs and ended with a fifth in a row of gains as investors piled on oil after OPEC and its allies successfully led a production increase without rocking the market.
News that vaccine manufacturers were working to deliver as many doses as possible before the end of December to limit COVID-19 also raised raw prices, amid efforts by US lawmakers to send a new financial stimulus for coronavirus.
New York trading, the leading indicator for US crude oil, was last traded at $ 46.09 after officially closing Friday’s trading at $ 46.26, up 62 cents or 1.4%. Earlier in the session, the WTI hit $ 46.68, the highest level since March.
For the week, the US crude index rose by 1.6%. It came after November with a huge gain of 27%, which was WTI’s best in a month since May.
London’s global crude oil benchmark was last traded at $ 49.05 after officially settling on Friday at $ 48.71, up 46 cents, or 1.1%. Brent hit a session high of $ 49.86 earlier, the closest to the $ 50 a barrel key it last traded on in February.
Brent’s weekly profit after the rally of 28% in November, which was the global oil regulations a month ago in May.
Oil prices have plummeted over the past month, prompting people around the world to travel freely soon as millions of doses of coronavirus vaccines were prepared for delivery in the coming weeks, following approval by US and UK health authorities
“Vaccine optimism should keep demand expectations healthy until 2021,” said Ed Moya, an analyst at OANDA in New York, in a note on oil.
Crude’s rally in the just concluded week was reinforced by the oil producers’ ability within the OPEC + alliance to add only 500,000 barrels to daily production instead of an originally feared 2 million barrels.
Expectations that the US Congress would soon agree on a fiscal stimulus from Covid-19 also boosted the market. Stimulus plans such as these tend to weaken the dollar and increase the commodities in the currency, including oil. The meeting lasted six years at 90.47 on Friday.
Energy calendar ahead
Monday 7 December
Private Cushing inventory estimates
Tuesday, December 8th
weekly report on oil stocks.
Wednesday 9 Dec.
EIA report every week on
EIA report every week on
EIA report every week on
Thursday 10 dec
EIA report every week on
Friday, December 11th
Baker Hughes weekly survey on
Precious Metals Review
Gold prices consolidated on Friday after a three-day rise but still ended with their best week in four as investors hedged against the tumbling dollar steadily supporting the yellow metal with renewed emphasis on a US Covid-19 tax relief bill.
at New York’s Comex was last traded at $ 1,842.10 per ounce, after officially settling to $ 1,840, down $ 1.10 or 0.1%.
For the week, however, the benchmark received a gold contract with almost 50 dollars or 3.3%. It was the yellow metal’s best week since the week ended on October 30, erasing a significant portion of last week’s almost 5% loss, which was the largest weekly since July.
, reflecting real-time trading in gold metals, which was last traded at $ 1,837.32, down $ 3.65 or 0.2%. For the week, bullion rose by 2.8%.
Gold is emerging from one of the most brutal sales ever after dynamic breakthroughs in COVID-19 vaccines and their potential availability before Christmas caused a run on money in shelters.
The yellow metal lost about 6% of its value in November, most in a month since 2016 and fell to $ 1700 territory. Investors have in recent weeks directed money at stock markets and other risky assets such as oil, as they witnessed an epic meeting among the idea that vaccines and therapy would soon put an end to the spread of coronavirus.
Despite the continued emphasis on risk, gold is gathering as a haven again in talk of a new US Covid-19 stimulus effort, which instead triggered a dip in the dollar, the alternative trade to the yellow metal. It fell more than 1% to a six-year level of 90.47.
The US Congress originally passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in March, which distributed approximately $ 3 trillion in paycheck protection for workers, loans and grants to companies, and other personal support for qualified citizens and residents.
In recent months, however, Democrats in Congress have been locked in a bitter debate with Republicans in the Senate over a gradual relief plan for the CARES law. The dispute has basically been over the size of the next stimulus as thousands of Americans, especially those in the aviation sector, risked losing their jobs without further help.
The stalemate was finally broken last week after a bipartisan group of Democrats and Republicans proposed a $ 908 billion relief deal, which the two sides have been negotiating ever since.