Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Commodities Week Ahead: Trump's Mocking Of Virus Aids Oil; Gold Near $1800

By Investing.com (Barani Krishnan/Investing.com)CommoditiesJul 06, 2020 04:14AM ET
www.investing.com/analysis/commodities-week-ahead-trumps-deriding-of-virus-helps-oil-gold-in-range-200529782
Commodities Week Ahead: Trump's Mocking Of Virus Aids Oil; Gold Near $1800
By Investing.com (Barani Krishnan/Investing.com)   |  Jul 06, 2020 04:14AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
XAU/USD
-1.66%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
Gold
-1.75%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
LCO
-4.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-4.86%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Oil bulls will look to extend their advance into $40 territory this week, based on expectations for sizable fuel demand during this past US Independence Day weekend. The Trump administration’s belittling of the coronavirus pandemic will also help those who are long crude.

US crude stockpiles dropped by 7.2 million barrels during the week ended June 26—about 10 times more than forecast—and traders will be justified in expecting another decent drawdown for the week running up to the Fourth of July holiday.

Daily WTI Crude Futures
Daily WTI Crude Futures

And while US crude production and rigs counts are no longer crashing like they did three months back, the Organization of the Petroleum Exporting Countries is continuing to tighten the noose on global output to ensure no let up in the market’s upward momentum.

The Saudi-led and Russia-assisted OPEC+ alliance of some two dozen oil exporters has pledged to slash production by a record 9.7 million barrels per day for a third month in July. From August, the cuts are due to taper to 7.7 million bpd until December.

Crude To Run Further Above $40

Collectively, the decline in US crude stockpiles and the OPEC+ cuts provide an adequate support base for West Texas Intermediate and Brent crude futures to extend their rally above $40 this week.

Upbeat US jobs numbers helped oil prices jump over 4% last week, wiping out the previous week's losses.

WTI gained 5.6%, compared with a 3.2% loss the previous week. Brent climbed 4.3%, more than making up for the slide of 2.8% the week before.

Still, surging cases of COVID-19 could temper the bullishness in crude and pose headwinds for the market, and oil bulls need an effective antidote to neutralize that fear.

Enter President Donald Trump, who claimed at the weekend that 99% of COVID-19 cases were “harmless.”

The president’s observation came despite Texas, the largest US oil refining state, and Florida, the leisure hub of America, both reporting their biggest daily rise in new confirmed cases of coronavirus over the past few days, bringing total deaths across the country to nearly 130,000 and infections to over 2.8 million.

Should the new wave of the outbreak trigger panic, it could prompt state governors to shut their economies again, like they did in March through April, hitting economic recovery and oil demand. The Trump administration is doing all it can to prevent that.

Stephen Hahn, commissioner of the US Food and Drug Administration, appeared at pains on Sunday not to openly contradict Trump’s remark that 99% of new COVID-19 cases were not risky, saying it’s “a serious problem that we have” and “we must do something to stem the tide.”

Jeffrey Halley, senior market strategist in Sydney for online trading platform OANDA, said financial markets’ “herd immunity” to the pandemic has been reinforced by attempts to downplay the resurgence of the virus.

“Oil prices seem evenly balanced between opposing forces at the moment,” said Halley. “On the one hand, the procession of economic data released last week is emphasising that a global recovery is underway for now,” he said.

“On the other, having rallied so far on so little since mid-March, nagging doubts over the recovery’s longevity are capping gains."

Since the lows of late April, WTI has gained more than 300%, while Brent has risen by 190%.

Volatility Ahead For Gold Bugs

On the gold front, the safe-haven crowd which finally saw the price hit $1,800 last week may have to await a while for bigger paydays of $2,000 an ounce and beyond, as new bouts of volatility are expected from the face-off between risk and the second wave of COVID-19.

US gold futures hit $1,803.95 last week, the highest since the all-time peak of $1,911.60 set in September 2011.

Spot gold hit $1,789.48, its highest since early October 2012. The price hit a record high of $1,920.85 in September 2011.

Daily Gold Futures Chart
Daily Gold Futures Chart

Gold’s advance was blunted by risk appetite that drove Asian equity indices to four-month highs on Monday, fuelled by expectations of super-cheap liquidity and fiscal stimulus to sustain the global economic recovery.

"We're seeing some big gains in Hong Kong and Chinese share markets," and that sort of growth-positive movement is generally expected to weigh on gold, Michael McCarthy, chief strategist at CMC Markets, was quoted saying by Reuters.

Disclaimer: Barani Krishnan does not own or hold a position in the commodities or securities he writes about.

Commodities Week Ahead: Trump's Mocking Of Virus Aids Oil; Gold Near $1800
 

Related Articles

Satendra Singh
Natural Gas: Hurricane Worries   By Satendra Singh - Sep 24, 2022 2

Analyzing the movements of the Natural Gas Futures during the last week, I find that natural gas bulls were in hurry to retreat from Wednesday’s high at $8.123, after trading in a...

Commodities Week Ahead: Trump's Mocking Of Virus Aids Oil; Gold Near $1800

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (11)
Mat Piekutowski
Mat Piekutowski Jul 06, 2020 9:24AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Our President is the best and only alternative to keep America on its path towards economic prosperity big part of which is national safety for citizens and their businesses
Jozef Drozd
Jozef Drozd Jul 06, 2020 9:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
https://www.globalresearch.ca/no-one-has-died-coronavirus/5717668?fbclid=IwAR18Pj19iExANyQUwDzIO3x1njNWRFH7VosgL6UZU3qK1xre7D1ZWmpKD7E
Kathie ILL
Kass1212 Jul 06, 2020 9:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You just cannot refrain from bashing our President. Glad yoy gave him credit for gold price rising...
Barani Krishnan
Barani Krishnan Jul 06, 2020 9:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I didn't. The other readers here did.
Sam Iam
Sam Iam Jul 06, 2020 9:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
He's right deaths are decreasing. The main thing is death is decreaasing. This means it really is harmless. If you have the sniffles, you have the virus; according to new guidelines. And, the new rules are if you have it, they add 15 to the count.
Barani Krishnan
Barani Krishnan Jul 06, 2020 9:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
From CDC: Based on death certificate data, the percentage of deaths attributed to pneumonia, influenza or COVID-19 (PIC) decreased from 9.0% during week 25 to 5.9% during week 26, representing the tenth week of a declining percentage of deaths due to PIC. The percentage is currently at the epidemic threshold but will likely change as more death certificates are processed, particularly for recent weeks.
AIM Investor Journal
AIM_IJ Jul 06, 2020 8:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If the US have had approx 15 million cases then he is right about the 99%
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Jul 06, 2020 7:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
gold will see ^ or A shape drop off to 1000 to 600
Kristof Naessens
Kristof Naessens Jul 06, 2020 7:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The previous bull market in gold lasted 10 years and has nothing to do with covid, it's the endless government money printing and already real negative intrest rates that is the main driver for gold. If you're investing in the precious metals stocks you have no excuse for making a ********load of money in the coming years!
Andrew carson
Andrew carson Jul 06, 2020 7:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And then you woke up.
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Jul 06, 2020 7:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so much corona virus was needed to take gold to 1800. when goes off, gold will be 600
Andrew carson
Andrew carson Jul 06, 2020 7:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Get a clue
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Jul 06, 2020 7:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
gold finally made top above 1800 with great difficulty. now gold is ready to go to 600
James Holmgren
James Holmgren Jul 06, 2020 6:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks to Dr Trump Covid-19 will ****and cripple more than any other pandemic ever A new vaccine
Barani Krishnan
Barani Krishnan Jul 06, 2020 6:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Most certainly :)
Neerajkumar Subashchand
Neerajkumar Subashchand Jul 06, 2020 6:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hello Barani sir, can you give short direction for gold
Barani Krishnan
Barani Krishnan Jul 06, 2020 6:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
We'll be looking at this range of $1750 to $1800 for a while, I think. It's a broad band but reflective of all the push-pull factors in the market now.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email