Oil And Gold Analysis: Gold Prices Jump In And Out Of Positive Territory
ICM Brokers | Jan 07, 2014 04:30AM ET
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Crude oil gain despite negative clues The markets were also not affected by an expected increase in U.S. domestic oil supplies for the first time in six weeks, figures for which will be released on Wednesday. Ongoing expectations for Libyan oil exports to resume to near normal levels sent prices falling due to the added supply they'd bring to the global market. Libyan oil operations faced glitches in the recent past due to protesters disrupting production at various oilfields, and expectations for the country to possibly double its output to around 600,000 barrels per day soon pressured prices lower on Monday. Expectations for increased exports from South Sudan also nudged prices lower. Prices also slumped after the Institute of Supply Management said its non-manufacturing purchasing managers' index fell to 53.0 in December from 53.9 in November. Analysts were expecting the index to increase to 54.5, and the disappointing reading stoked concerns that the U.S. economy still faces potholes along its road to recovery and may demand less fuel and energy than once anticipated.
GOLD
Gold prices jumped in and out of positive territory on Monday on bullish reports of rising physical demand in Asia, while soft U.S. service-sector data weakened the dollar and also gave the yellow metal room to rise. Gold trades sideways on soft U.S. data, Fed monetary concerns Long-term concerns that the Federal Reserve remains on track to continue scaling back monthly bond purchases that have supported the yellow metal since September of 2012 pressured prices lower. Reports of rising demand for gold bars and jewelry in Asia pressured prices up on Monday, especially among bargain hunters who viewed the yellow metal as an attractive buy. Gold prices fell about 29% in 2013 amid growing expectations that the Federal Reserve will taper its USD75 billion in bond purchases this year. Past and present rounds of Fed bond purchases aim to drive recovery by suppressing long-term borrowing costs, weakening the dollar in the process and making gold an attractive hedge.
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