Thread: ForexMart's Forex News

October 6. Gold is rising after the morning fall

Gold on Wednesday demonstrates high trading volatility: in the morning, the precious metal fell to $1,745 per ounce, then rose sharply to $1,761. The current quote of the asset is $1,757 per troy ounce.

The pressure on the metal is exerted by the growth of US government bond yields and the strengthening of the dollar amid expectations of the publication of an important report by the US Department of Labor on Friday.

Investors are actively buying up the dollar, which is a protective asset on a par with gold, thus hedging the risks of accelerating inflation and slowing economic growth. The rising dollar also reduces the attractiveness of gold as an investment object for holders of other currencies.

The important Nonfarm payrolls report will be released on Friday. At the same time, unemployment data will be published in September. Analysts predict that the number of jobs in the United States, excluding the agricultural sector, increased by 473 thousand, and unemployment fell to 5.1% (from August 5.2%).

It is worth noting that even if the employment data does not show positive dynamics and simply coincides with forecasts, the US Federal Reserve is likely to start curtailing incentives anyway. And this puts additional pressure on gold.

October 8. September Nonfarm Payrolls – what to expect?

Today, markets are waiting for an important report on employment outside of US agriculture in September. According to forecasts, the economy has created more than 500 thousand jobs, and the unemployment rate has fallen to at least 5.1%.

Why is this report important and how can it affect the dynamics of the US dollar?

Ahead of the publication, the dollar remains relatively stable against most of the leading currencies. At the same time, government bond yields resumed growth, as the September peyroles may strengthen the determination of the US Federal Reserve to soon wind down the asset repurchase program.

However, the regulator is already quite determined: in his last statement, Fed Chairman Jerome Powell said that the curtailment could begin as early as November, and a strong employment report is not a prerequisite. Thus, even a relatively weak report will only lead to a temporary drawdown of the US dollar. Moreover, a decrease in the unemployment rate to 5% can compensate for any weakness in employment statistics.

While waiting for the report analysts share their forecasts. The following arguments are in favor of strong data:

-earlier, ADP announced the creation of 568 thousand jobs;
-the index of business activity in the manufacturing sector from ISM increased from 49.0 to 50.2;
-The consumer confidence index from the University of Michigan has recovered;
-the number of initial applications for unemployment benefits decreased, as did the total number of people receiving benefits.

The following arguments can be made in favor of a weak report:

-the index of business activity in the service sector from ISM decreased from 53.7 to 53;
-The Conference Board consumer confidence index fell to a 7-month low;
-Challenger reported a 13.8% increase in the number of layoffs (from a 24-year low).

October 11. Brent passed the $84 level for the first time in three years

The oil market showed strong growth at the beginning of the new trading week. Brent quotes broke the level of $84 per barrel for the first time since October 2018. The current price of the asset is $83.97. WTI grade oil has also risen in price today – to $82.17 per barrel, which was the highest since October 2014.

The rise in energy prices is primarily due to the process of economic recovery from the effects of the global pandemic. Experts note that high rates of vaccination contribute to the cancellation of lockdowns and the lifting of restrictions, which further stimulates consumption and leads to an increase in demand.

At the same time, the energy crisis in Europe and Asia provided additional support to the oil market, which led to a jump in gas and coal prices and increased the attractiveness of oil as a raw material for energy production.

And another factor of price growth can be called the policy of the OPEC+ countries. Last week, the countries of the energy alliance decided to maintain the previously adopted plan to increase production by 400 thousand barrels per day.

October 12. Europe began to save on gas

According to the Parisian consulting company Engie EnergyScan, gas consumption in Europe fell by 12% compared to the pre-pandemic level. The industrial sector has begun to reduce demand for natural gas, as record prices have made fuel too expensive for many consumers.

Germany, the Netherlands and the UK have so far reduced consumption the most, but analysts predict that this trend will continue, especially when the demand for gas for heating increases in the winter months.

There is also an opinion that high gas prices may slow down the economic recovery in Europe, as industrial consumers suffer from high fuel costs. Some enterprises were forced to temporarily cease their activities, while others were forced to significantly reduce production volumes.

Recall that the cost of gas in Europe has reached a historical record, getting almost close to the level of $2,000 per thousand cubic meters in early October. Then, after the words of Russian President Vladimir Putin about the possibility of increasing fuel supplies, gas began to become cheaper. The current price of natural gas is $1018.62.

October 13. Gold is getting more expensive amid concerns about inflation

On Wednesday, gold shows an increase in quotations against the background of a cheaper dollar and concerns about the economic consequences of the recent sharp rise in energy prices. Then oil prices rose to the highs of several years in the area above $84 per barrel.

The current price of gold is $1,788.2 per ounce. Additional support for the precious metal rate was provided by data on inflation in the United States. According to the press release of the Ministry of Labor of the country, consumer prices in September accelerated growth to 5.4% y/y (from 5.3% in August), and on a monthly basis increased by 0.4%.

Markets fear that accelerating inflation, partly due to the global energy crisis, could hold back economic growth. And this puts pressure on the dollar and makes gold more attractive and cheaper for foreign buyers.

October 14. The EC intends to spur EU countries to switch from natural gas to biogas

By the end of this year, the European Commission intends to propose rules and measures that should facilitate the transition of EU countries from fossil natural gas to a cleaner fuel – biogas.

European Commissioner for Energy Kadri Simson noted that as many countries move towards decarbonization, fossil gas will definitely be replaced by renewable gas, be it biomethane or renewable hydrogen. And the establishment of certain rules that facilitate the transition process will become the basis of the December gas package.

It is reported that the European Commission intends to present the reform of the EU gas market in December. The issues of storage and security of gas supplies, along with other important topics, will become important elements of this reform.

It is worth noting that not all EU countries currently have gas storage facilities. The European Commissioner also noted that «a more integrated European approach can optimize costs and protect against price fluctuations.» The EC intends to consider such problems as simplifying access to storage facilities and ensuring their optimal use.

October 15. Oil grew to a maximum of 3 years

Oil quotes on Friday again updated a multi-year high, rising to $85.02 per barrel for the first time since October 2018. The current Brent quote is $84.80 per barrel.

Even yesterday's report from the US Department of Energy did not prevent the price increase, according to which the country's reserves of raw materials unexpectedly increased by 6.09 million barrels to 426.98 million. Analysts expected less increase – only 900 thousand barrels. Gasoline commodity reserves decreased by 1.96 million barrels (analysts expected an increase of 600 thousand barrels) and amounted to 223.11 million barrels. Commercial distillate stocks decreased by 24 thousand barrels (analysts forecast a decrease of 1.1 million barrels), to 129.31 million barrels.

Over the past month, prices for «black gold» have increased by almost 13%. The market is supported by signs that supply will be limited over the next few months, while rising gas and coal prices have led to a massive shift to petroleum products. Additional support for the market was provided by the information that Saudi Arabia rejected calls for additional OPEC+ supplies.

American WTI crude oil is also showing growth. The current price of a barrel of this grade of oil is $82.05 on Friday.

October 19. The first Bitcoin ETF started trading in the USA

Today, the first exchange-traded fund ETF, based on bitcoin futures of the Chicago Mercantile Exchange, began trading on the New York Stock Exchange (NYSE) under the ticker BITO.

Analysts are confident that the launch of the ProShares Bitcoin Strategy ETF fund will contribute to an increase in the number of bitcoin purchases by new individual investors, as a result of which the value of the cryptocurrency may grow to $168 thousand by the end of the year, or by 170%.

What is an ETF fund? This is an investment fund that forms portfolios of assets and issues its own shares, where each security is linked to a certain part of the fund's assets. Thus, an ETF allows you to purchase an asset without actually owning it.

In the case of bitcoin, an ETF gives investors the opportunity to access bitcoin without having to cooperate with cryptocurrency exchanges.

After the news of the approval of the bitcoin ETF by the US Securities and Exchange Commission (SEC), the value of the most popular cryptocurrency again updated its maximum, reaching the area of $65 thousand.

Two factors contributed to the growth of bitcoin: the expectation that the launch of a new ETF will attract a significant inflow of funds, as well as the fact that investors who already have access to bitcoins get a new way of owning them. Which, in turn, will also contribute to more purchases.

October 18. Gold is getting cheaper amid the dollar and UST yield growth

At the beginning of the new trading week, gold quotes are showing a decline against the background of an increase in the yield of US government bonds and the strengthening of the dollar. The current spot price of the precious metal is $1,764.45 per ounce.

On Monday, the yield on 10-year US Treasury bonds rose to 1.6116%, and the dollar index against a basket of major world currencies rose by 0.2%, which increased the value of gold for holders of other currencies. An expensive dollar, as a rule, is more attractive as a reliable asset (due to rising inflation, increasing expectations that the Fed will begin to curtail incentives or even announce the timing of a rate hike next year).

In addition, market participants today drew attention to statistics from China, which indicated a slowdown in the country's economic growth to a minimum for the year in the third quarter. And against the backdrop of slowing economic activity in China, the dollar is expected to grow, and gold will become cheaper.

Silver fell to $23,290 today, palladium – to $2,020.50, and platinum showed a decline to $1,042.19 per ounce.

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October 21. Brent declines slightly after reaching 3-year high

Yesterday evening, Brent oil quotes reached another high at $86.09 per barrel. Today the price is moderately declining: the current quotation of the asset is $85. WTI crude oil is also showing a decline after yesterday's rise to $83.94 per barrel. The current price for a WTI barrel is $82.86.

The driver of yesterday's growth was the data from the US Department of Energy on oil reserves in the country. In particular, the commercial reserves of hydrocarbons in the United States last week decreased by 431 thousand barrels – to 426.54 million. Gasoline reserves decreased by 5.368 million barrels and amounted to 217.74 million barrels, distillate stocks decreased by 3.913 million barrels, to 125, 39 million barrels.

Experts on average expected an increase in oil reserves by 2 million barrels, as well as a decrease in gasoline reserves by 2.2 million and distillates – by 2.4 million.

A day earlier, similar statistics were published from the American Petroleum Institute (API). The data indicated an increase in US oil inventories by 3.3 million barrels for the week ending October 15.

October 20. The expert assessed the possible problems of Europe due to high gas prices

Analysts share their gloomy forecasts regarding the future prospects of the European oil and gas market, as well as the electric power industry of the region as a whole.

Some of them are of the opinion that the industry in Europe may start working intermittently due to high prices for «blue fuel». In recent weeks, the EU has faced a rapid rise in gas prices, which leads to higher electricity prices.

Back in August, the estimated price of the futures was about $515 per thousand cubic meters, and by the end of September, the indicator had more than doubled. At the same time, on October 6, prices even updated the historical maximum at $1937. Now the price of futures in Europe is holding slightly above $1000 per thousand cubic meters.

Experts believe that the current high prices will remain so and will even be at risk of spikes. This may lead to some problems in the area of demand caused by prices. We are talking about closing or reducing the hours of operation of gas-intensive consumers in order to achieve a market balance.

However, today everything is not so tragic. The European Commission emphasizes that there is enough gas in the storage facilities for the European Union to pass the winter, and there are no risks to the stability of energy supply yet.

October 26. Tesla may resume support for payments in BTC

Elon Musk, the head of the leading manufacturer of electric cars Tesla, hinted that he may soon restore support for payments in bitcoins.

In particular, in a report submitted to the U.S. Securities and Exchange Commission (SEC) for the third quarter, the company noted that «it may resume the practice of trading cryptocurrencies in the future.»

Tesla has already accepted cryptocurrency as a means of payment when buying electric cars at the beginning of this year (in the period from January to March). In addition, the company invested $1.5 billion from its treasury in bitcoin during the first quarter of 2021. However, after that, Tesla stopped supporting BTC in the wake of criticism of bitcoin mining, which has a negative impact on the environment.

Then Elon Musk said that Tesla would again consider resuming support for bitcoin payments if at least half of the network's hashrate would run on renewable energy sources.

October 25. Oil rises in price on the assessment of further actions of OPEC+

On Monday, world oil prices are rising, hovering above $85 a barrel. The oil market was supported by OPEC+ comments on the prospects for production restrictions.

The current Brent quotation is $85.20 per barrel (daily maximum – $85.77), the price of WTI oil is $84.08 per barrel (during the day the asset grew to $85.20).

Today it became known that a number of OPEC+ members, led by Saudi Arabia, declared the need to maintain a cautious approach to the rate of increasing oil production.

Since May last year, the OPEC+ alliance has cut production by 9.7 million barrels per day due to a drop in oil demand. As the situation stabilized, the terms of the agreement were adjusted. So, since August 2021, the alliance has increased production by 400 thousand barrels per day per month, hoping to gradually withdraw from its obligations by the end of September 2022.

Analysts estimate the global demand for oil: now it has already reached 99 million barrels per day and will soon return to the dock level of 100 million barrels per day.