FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

Oil, gold and interest rates

12 March 2021

Earlier, we have repeatedly noted the high contribution of OPEC+ to the recovery of the oil market, which led to a fairly strong increase in oil prices. At the same time, traders almost completely ignored the increase in oil reserves in the United States by more than 35 million barrels over the past two weeks. Let me remind you that a strong increase in oil reserves should help reduce the price of black gold, and in this case, even its collapse. But as you can see, this did not happen.

The US Energy Information Administration explains this phenomenon by saying that in the next few months, the oil deficit may reach 3 million barrels per day, even if OPEC+ oil production increases. This forecast takes into account the growth of consumption to 98.2 million barrels per day, which is 4 million barrels less than the relatively "normal" level. Therefore, the trend in the black gold market may remain bullish for at least another 4-5 months.

Let's move on to the gold market. According to the manager of one of the largest investment funds BlackRock, gold has ceased to perform a hedging function for the stock market. Simply put, now traders do not insure their risks by buying gold, which significantly increases the probability of a collapse of this market in the long term. Moreover, we are hearing about the upcoming global economic recovery, and this is another bearish fundamental factor for the precious metals market. Therefore, the downtrend can only intensify.

We discussed the commodity markets, now let's move on to the main instrument of monetary policy of all central banks of the world - the interest rate. I propose to consider the current situation using the example of the US Federal Reserve System. Thus, the American regulator has already issued sovereign debt in the amount of $16.3 trillion in 2020, besides, in 2021, about $12.6 trillion will be issued. Against the background of the repeatedly discussed growth prospects of the US economy, the likelihood of rising inflation is rapidly increasing.

In this case, the Fed will be forced to raise rates, thereby significantly increasing the cost of debt that needs to be serviced. Here we have a vicious circle: on the one hand, there is a prospect of growth of the American economy, of course, this is very good, but on the other hand - a significant increase in the debt burden can provoke a series of bankruptcies. All this is very reminiscent of 2008 and the clearly overheated real estate market in the United States. But now almost all markets are in a similar position.

At the end of the review, I should pay attention to the upcoming publication of the report on the change in the GDP growth rate in Britain for January of this year. Economists expect another deterioration in this indicator and even the appearance of negative values for the first time since July 2020. Also, the volume of industrial production in January may be significantly lower than in December, which is negative for the pound.




Forex and Cryptocurrencies Forecast for September 26-30, 2022
Forex and Cryptocurrencies Forecast for September 26-30, 2022

Last week, all the attention of the markets was focused on the FOMC meeting of the US Federal Reserve, which took place on September 21. The probability of another rate hike by 75 basis points (bp)...

26 Sep 2022

Trading the SPDR S&P 500 ETF Trust
Trading the SPDR S&P 500 ETF Trust

The Standard & Poor’s (S&P) 500 Index measures the market capitalisation of the top 500 US largest corporations. Many traders and investors use the S&P 500 Index as a benchmark...

23 Sep 2022

Gold pauses as traders await Fed decision
Gold pauses as traders await Fed decision

The anticlimactic performance of gold continues as the prospect of aggressive rate hikes by central banks around the world amid heightened inflationary pressures...

21 Sep 2022

Developing a forex trading plan: All you need to know
Developing a forex trading plan: All you need to know

All forex traders have different backgrounds, market views, risk appetite, thought processes and expectations. Therefore, traders should not just blindly follow what other traders do...

20 Sep 2022

NordFX: Forex and Cryptocurrencies Forecast for September 19-23, 2022
NordFX: Forex and Cryptocurrencies Forecast for September 19-23, 2022

The World Bank said last week that risks of a recession in 2023 are growing amid simultaneous tightening of monetary policy by the world's leading Central banks and the energy crisis in Europe...

19 Sep 2022

Gold gains traction on the back of weaker dollar
Gold gains traction on the back of weaker dollar

The precious’ recent rally from its near year-to-date lows could be attributed to the broader dollar weakness observed in the past week, even though it remains elevated near its 20-year highs...

14 Sep 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
NordFX information and reviews
Vantage information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.