As the dollar continues to rise in value, its effect on gold price remains evident, and this has been experienced first-hand in gold mining companies in London markets. This follows indication by Fed’s Janet Yellen that the U.S rates are going to raise soon. Metals miner Fresnillo is reported to have dropped by 6.3% and Randgold Resources dropped 4.8% as when gold dropped all the way to $1,206 per ounce.
Since commodities are priced by use of the dollar, its rise means hike in their price, making such commodities expensive for holders of other currencies. Gold is among those commodities and has been directly affected by the changes in the U.S rates, which has lead to shift in the optimum opportunity cost resulting from holding such non-yielding assets as bullion as well. In other metal’s trades, Silver target for December sunk a whole 1.16% to a low $16.580 per a troy ounce. On its side, Copper expectations for December dropped by 0.3% to $2.482 per pound.
These changes are coming at a time when debate over the shift in the U.S economy seems to gain raise diverse reactions, with Philadelphia Fed chair Patrick Harker supporting the move to raise rates, and Cleveland Fed head Loretta Mester maintaining the Fed should not overreact to market changes resulting from the presidential elections.
Elsewhere, Brent crude oil was speculated to benefit for the first time in five weeks this Friday from the renewed hopes that OPEC could probably give thumbs up on production cuts, but the soaring U.S dollar doomed the possibilities. Brent crude oil futures were at $46.49 a barrel at 1101 GMT, while West Texas Intermediate crude oil futures went down 7 cents to hit $45.35 per barrel. At the same time, changes in oil output are facing changes.
OPEC members have asked Iran to maintain its oil production at 3.92 million barrels per day, following production-limiting deal for the member countries. However, Iran has remained silent over the proposal, which may force the organizations members to review the proposal. On her side, Iran had previously noted that it could cap its output between 4.0-4.2 million barrels per day. At the same time, Russian Energy Minister, Alexander Novak expressed his confidence about reaching an output deal between Moscow and OPEC that can go a long way in boosting oil prices. This was after his meeting with OPEC members on Friday.
Still on matters concerning oil markets, U.S and Saudi Arabia are apparently standing on divided ground over oil trade. Way before his election, the new U.S president, Donald Trump had confided about liberating America from oil cartels and ensuring the country gains energy independence. On his side, Saudi minister maintained that energy runs the global economy, adding that the U.S is a major benefactor of global free trade. Now that he has made it to the White House, the future of his oil trade with Saudi remains bleak.
However, the president-elect may change his mind, as his country is still a major importer of oil from Saudi, with the Eastern nation being the second largest exporter to the U.S after Canada. Further, Saudi is the leader of the oil cartels Trump was talking about getting rid of, suggesting that his country was desperate for oil in the past, but maintaining that new technologies have led to a major glut in the oil market.
In other areas, FTSE 100’s index is apparently facing a threat of dropping to 6612, with an imminent reluctance for any rise beyond 6800 looming large. Failure to move above 6800, more particularly failing to make it to 68500 is a red flag, as it will mean a steep drop to 6750, even worse, lower to 6612. All the while, this is bad news since the pre-market movements beyond 6800 are reported to be on good target for fresh selling, which is always the dream of many enterprises as CMC markets.
On a similar note, DAX has its eyes set at making it to 10,800, after failing to maintain the target yesterday. With the 10,600 mark showing a considerable level of support recently, chances are that many buyers are bound to join this level. For S&P 500, moving back to 2108 is the main incentive now, but the index remains below 2016 threshold, despite a slow rise. Hitting 2190 is a great milestone that is proving difficult to achieve.