FX.co ★ Crude oil and gold review

Crude oil

The crude oil futures closed above 67 dollars/brl on Thursday, that turned out to be the highest reading for 3 weeks. The housing market report and financials release of the companies raised the stock indexes and there had appeared a hope for economic revival, that affected the oil positively.
September crude oil contract rose by 1.76 dollars/brl or by 2,7% to 67,16 dollars/brl at the New York Merchantile Exchange (NYMEX), the highest level since July 01. During the trading session the crude oil price reached the mark of 69,50 dollars. The price upturn has been lasting for 6 sessions from the previous 7.
However, the oil reserves report still demonstrates a weak demand. According to EIA data, crude oil reserves, petrolium and other oil products in the USA increased by 1.9 million barrels within the preceding week. The reserves are growing 6 sequent weeks, the best result since 1990. Aside from this, the crude oil import to Japan, which appears to be the third largest oil consumer in the world, fell by 19% in June to the lowest level for 18 years. A sharp slide down raised concerns of investors regarding weak global demand on oil.

Gold

The gold price turned up by 0.16% to 954,8 on Thursday. Precious metals market indicators were the worst in raw materials sector, as this market pace is set up by the U.S.dollar movement. Though, a big part of investors was buying gold as a hedging from inflation and as a safe currency, nevertheless, the gold demand is much lower, as the market climate improves, and the inflation risk remain at low level.
A negative factor for gold is also that the South Africa gold diggers may promt the citizens for the strike action with requirement of raising the salaries. Mining companies AngloGold, Ashanti and Gold Fields offered to raise the salary rate by 8-9.5% versus 15% reqiured by employees. If this strike action takes place it will impact the gold production. At the same time, the infuence on gold will be temporary, as the gold market tightly connected with the financial one, and in reference to experience, the respond to the demand and supply adjustments used to be short term.

Kind regards,


Analyst: Vladimir Donin