FX.co ★ Crude oil and Gold review

Crude Oil

Futures on crude oil sharply fell on Tuesday despite the powerful beginning against the improvement of consumer trust in the USA.

The October contract on sweet crude oil fell by 2,32$ or 3,1%, to 72,05$ per barrel at the New York Commodity Exchange. Quotations of Brent oil futures decreased by 2,47$ to 71,79$ per barrel.

The crude oil prices have started to fall after they reached the level 75 dollars per barrel at the beginning of session, for the first time since October 2008. The new 10-month high was reached after Conference Board company announced that its index of the USA consumers trust index grew to 54,1 on August.

For the oil market it meant that growth of consumer expenses lead to strengthening of economic activity in the major economics-oil consumers, and also to growth of mineral oil use by seaborne traffic.

However, the US dollar also got support because of situation improvement in the American economy, strengthening against euro that has led to oil prices reduction as many investors use the dollar denominated oil futures for hedging from inflationary effect since the weakening of the American currency.

Now the market attention is switched to the USA oil reserves data which will be presented by the Department of Energy on Wednesday. Last week oil reserves were unexpectedly reduced to 8,4 million barrels. Analysts predict the oil reserves reduction by 1,5 million barrels this week.

Gold

Futures on gold closed upside on Tuesday in response to the US dollar weakening though have reduced the won positions during the trading, when the American currency restored part of positions, and the prices for other primary goods decreased.

The December contracts on gold rose by 2,30$ to 946$ per ounce at COMEX, reached a maximum during the trading at level 956,30 dollars.

Investors often apply to gold as to protection frame from dollar weakening. At one time prices for metal showed propensity to movement in the opposite direction with share indexes, gaining the support from falling on the stock markets, observed at the beginning of this year. During the last weeks, however, the gold prices and stock indexes, as a rule, moved in one direction depending on the general investors risk propensity which often depends on the dollar dynamics.

The volume of gold trading remained low. And it is one of reasons on why gold does not want to make breakthrough in any direction.

Kind regards,

Analyst: Vladimir Donin.