Oil And Gold Analysis: Oil Prices Start Off Year With Heavy Losses
ICM Brokers | Jan 03, 2014 04:29AM ET
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U.S. oil prices started off the new year with heavy losses on Thursday, falling to a three-week low, after data showed that the number of people who filed for unemployment assistance in the U.S. last week fell less-than-expected. Oil’s losses deepen after disappointing jobless claim soil prices fall sharply after disappointing jobless claims report Trading volumes are expected to remain light due to the holiday period, reducing liquidity in the market and increasing volatility, which can help exaggerate market moves. The U.S. Department of Labor said in a report earlier that the number of individuals filing for initial jobless benefits declined by 2,000 to a seasonally adjusted 339,000 last week. Analysts had expected U.S. jobless claims to fall by 7,000 to 334,000 from the previous week’s revised total of 341,000. Oil prices also weakened due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.6% to trade at 89.78. Oil traders now looked ahead to key U.S. weekly supply data, which was forecast to show a fifth consecutive weekly drop in crude stockpiles.
GOLD
Gold prices shot up on Thursday on the coattails of increased physical demand in Asia, though concerns the Federal Reserve will continue winding down stimulus measures in 2014 capped gains. Reports of rising demand for gold bars and jewelry in Asia sent prices spiking on Wednesday. Investors expected gains to be short lived, as data released earlier kept expectations strong the Federal Reserve will continue to taper its USD75 billion in monthly asset purchases as the year progresses. The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending Dec. 28 declined by 2,000 to a seasonally adjusted 339,000. Analysts had expected U.S. jobless claims to fall by 7,000 to 334,000 last week from the previous week’s revised total of 341,000, though investors still applauded the decrease. Past and present rounds of asset purchases rolled out since the 2008 financial crisis of bolstered gold ever since. Gold prices fell about 29% in 2013 amid growing expectations that the Federal Reserve will taper its bond purchases in 2014 and possibly end the program later this year.
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