The price of gold has witnessed great volatility last week with an increase of over 5.5% and addition of over $107 in just one week. The rise in gold prices have been favored by delays in inflation concerns and supported by the increased demand for Gold caused by the imminent festive season especially in India and UK. Gold Man Sach believes the price of gold is set to revisit $2000 as the year runs out. Crude Oil on its part has fallen significantly amidst pressures placed on OPEC by the Biden administration to push down energy yield prices which obviously is lowering dollar returns. Investors had rapidly booked their profits hence the decline seen last week. However, the long term outlook for Crude Oil remains Bullish not withstanding that the price might fall lower in the short term this week.
Gold (XAUUSD)
Last week has been a great feast for Gold traders and investors. The precious metal has witnessed a great bull run with a total increase of 6% in its market prices in just one week only. Every single pairing with gold gained at least +4%, while the popular pair in USD-terms XAU/USD had added up to 5%. A lot of factors have greatly favored this Gold Bullish momentum. Basically investors seem to be expanding their gains through gold ahead of the increasing inflation expectations and falling long-end bond yields. Hence following the CFTCs COT data given for the week ended November 9, investors obviously increased their net-long gold futures positions to 225,597 contracts, up from the 225,443 net-long contracts held in the week prior. Thus gold future market remains at its highest net-long positioning since the second week of June.
Nevertheless, the bulk of gains from Gold emerged mid-week on Wednesday after the October US inflation report (CPI) was released which showed the highest price pressures in the United States since 1990. Gold prices might sower higher all the more if the US real yields stay near record lows, in this new week. Thus should real yields – nominal yields and less inflation – continue to fall, gold prices will likely continue their rally.
Equally, the approaching festive season especially in India and Uk have increased the demand for Gold which made gold perform fantastically last week.
Consequently, Gold prices is braced to sower higher in the coming weeks. The next target for gold is $1910. Ultimately,
Gold Man Sach believes the price could touch 2000 once more. This will likely happen if talks on inflations further gets inconclusive as we round up the year.
Crude Oil
The price of crude has fallen significantly in the past weeks due to pressure from the US government on OPEC to push down the price Oil which is endangering the US dollar. Traders out of panic have decided to book their profits immediately from the long Bullish run. Currently, the price is sitting on a strong support at $79 per barrel.
However, the general expectations that the Bidens administration will intervene in the coming weeks to try to lower U.S. energy prices down all the more, may act as a negative catalyst for the WTI Crude Oil which might push the price lower to a new low below the present support at $79.1. This is so especially as the U.S. government feuds with OPEC+ to nudge the cartel to ramp up production and threatens to draw on supplies from the Strategic Petroleum Reserves (SPR) to keep a lid on crude prices and bring down the cost of gasoline at the pump.
Nonetheless, this will only be for a short term as Oil prices still maintain a bullish profile over long term, despite having a short term bearish outlook.
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