Precious Metals and Energy – Weekly Review and Upcoming Calendar By

Precious Metals and Energy – Weekly Review and Upcoming Calendar By

© Reuters.

By Barani Krishnan – There is new commodity in town. It is called “patience”. And traders need a lot of them when dealing with increasingly confusing things like the economy, job recovery after the pandemic, inflation and the Fed cut and rate hike (when it happens).

Gold traders, especially keen on trying to get back to the high $ 1,900 levels and the more formidable $ 2,000 levels, are probably more in need of this commodity than others, given the daily ravages caused by these commodities. elements on their price aspirations.

Without patience, other basic resources such as “distrust”, “panic” and “fear” are likely to be needed to bring gold investors to a new place – although they are admittedly not as noble as patience.

Florian Grummes, author of the Gold Optix blog, says it is only when there is mistrust – or panic and fear to some extent – that there will be new “significant and contrary entry opportunities” into the world. the yellow metal.

“While the pullback in recent days has certainly caused the euphoria to diminish, the general consensus remains clearly in favor of a further rise in gold prices,” Grummes said.

He notes that markets rarely go up directly. “On the contrary, they have to use twists and turns to ensure that the masses are not fully participating in the price increases.”

“Apart from that, patience is a virtue,” he adds.

Grummes may seem to have the perfect cure for the current disease of gold. There is one problem though: he wrote this blog a year ago.

This iteration of its Gold Optix was released on May 28, 2020.

Still, the market conditions he cites make this blog look like it could have been written for today.

This proves one thing: markets, gold included, operate in cycles.

Gold fell from the $ 1,900 it had held since the previous week on Thursday on data showing the United States at its lowest since the outbreak of the coronavirus pandemic in mid-March 2020.

The notion of a rapid labor market recovery sent the US and the rise instead as Comex futures fell to a Thursday low of $ 1,866.85 while gold in the cash hit a nadir of $ 1,865.49.

But less than 24 hours later, the employment picture in the United States was very different.

The Labor Department for the entire month of May showed that the United States created just 559,000 new jobs, 115,000 below economists’ forecasts, although the monthly unemployment rate fell by three percentage points. percentage at 5.8%. This suggested that the recovery in employment still had some way to go.

Immediately, spokespersons for the research houses began to embrace the theory that the Federal Reserve would be a long way from raising interest rates or cutting the $ 120 billion in bonds and other assets it bought every month since March 2020 to support the economy.

Aside from the disintegration of reduction rhetoric, the incessant inflation chatter – which almost seems like gibberish now due to the Fed’s indifference to the package – has also helped buyers’ goals. gold to go back to $ 1,900.

All other things being equal, a higher inflationary environment is good for gold, which is considered the best store of value in times of financial and political turmoil.

Yet in recent months, rivals in gold, the dollar and bond yields, have instead rallied on signs of skyrocketing inflation, with investors betting that the Fed will hike rates faster than expected – what she swore against.

The Fed recognizes the pricing pressures resulting from bottlenecks in U.S. supply chains struggling to meet demand in an economy that is reopening after months of suppression of the pandemic.

But the central bank’s federal policy-making committee, headed by President Jerome Powell, insists that these inflationary pressures are “transient” and will subside as the economy fully recovers from the pandemic.

The tapered versus transient debate has pretty much decided the fate of gold since the start of the year, with more power for the former so far.

It remains to be seen whether the May non-farm payroll will dramatically change this in the coming weeks.

“The movement in real yields crushed gold prices for most of the week. But the May non-farm payroll report showed markets that April’s report was no fluke, ”said Ed Moya, analyst at online trading platform OANDA.

Moya said any Fed rate tightening or cut will likely have to wait for the central bank’s annual summer convention in Jackson Hole, Wyoming, which serves as the holy grail of its monetary policy.

“Much of the bearish positioning before the nonfarm failure should be reversed because the Fed will nowhere be ready to talk about cutting,” Moya said, reinforcing the new notion.

Until then, patience is the commodity the gold mob must invest in – except what, the alternative resources will be mistrust, panic and fear.

In the case of oil, U.S. crude prices hit their highest level since 2018, as producer supply discipline and a recovery in demand counter concerns about an uneven rollout of COVID-19 vaccination in the world.

The slowdown in talks between the United States and Iran over Tehran’s nuclear program also boosted oil this week, lowering expectations of a return to the Iranian oil market not sanctioned by the United States. .

Gold market and price rounding

on the New York ExCom made a final trade of $ 1,894 before the weekend, after settling Friday’s trade up $ 18.70, or 1%, to $ 1,892 an ounce. For the week, it was down 0.7%.

Gold, reflecting real-time bullion trading, settled Friday’s trade at $ 1,891.12, up $ 20.34, or 1.1%. For the week, it was down 0.7%.

Traders and fund managers sometimes decide the direction of gold by looking at the spot price – which reflects bullion for quick delivery – instead of futures contracts.

Oil market summary and price recap

, the benchmark for U.S. oil, made a final trade of $ 69.41 before the weekend, after settling Friday’s trade up 81 cents, or 1.2%, to $ 69.62.

Over the week, WTI rose nearly 5%, following May’s 4.3% rally.

, which serves as the global benchmark for oil, traded before the weekend of $ 71.63 after setting Friday’s trade up 58 cents, or 0.8%, to $ 71.89.

Over the week, Brent was up 3.4% after gaining 3.7% in May.

Upcoming Energy Markets Calendar

Monday June 7

Cushing’s private inventory estimates

Tuesday June 8

weekly oil inventory report.

Wednesday June 9

Weekly EIA report on

Weekly EIA report on

Weekly EIA report on

Thursday June 10

Weekly EIA report on { natural gas storage

Friday 11 June

Baker Hughes Weekly Survey of

Warning: Barani Krishnan does not hold a position in the commodities and securities he writes about.

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