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8 Oct 2013
Crude oil nearly 104.00 area, gold in chase of a break-out
FXstreet.com (Athens) – Crude oil futures trade higher today on both sides of Atlantic after yesterday’s sharp losses, while gold is trading almost unchanged but also in deep search for a substantial break-out.
Crude ready to test the 104.00 zone; gold seeks a fundamental catalyst for the break-out
At the time of writing, NYMEX Crude oil is trading at 103.74 up (0.06%), while spot price of gold is trading at 1321.86 also slightly up (0.22%). The American dollar has been heading higher today, due to the fact that traders made their best efforts to capitalize their short positions on the greenback; thus the today’s uptrend performance of the American dollar is mostly attributed to profit taking of the market participants. Nevertheless, the dollar fell on Monday, remaining near an eight-month low against a basket of currencies, as the U.S. budget deadlock in Congress showed no sign of breaking. To elaborate on, the dollar index fell 0.2 percent to 79.952, not far from an eight-month low of 79.627 hit on Thursday.
Crude oil futures on both sides of the Atlantic pared losses on Monday after a sharp drop in earlier trade, following a report that a key pipeline delivering crude oil from Cushing, Oklahoma, had resumed shipping after an earlier outage. U.S. crude oil slipped 81 cents to settle at $103.03 a barrel, after trading close to $2 a barrel lower at $101.86 earlier in the session. Furthermore, the contract slipped below the 100-day moving average of $102.45. Finally, Brent crude futures reversed earlier losses to finish up 22 cents at $109.68 per barrel, after earlier trading as low as $107.89. Traders should take upon consideration that the correlation between oil and the American dollar is reflecting to a major extent the turbulence that exist all over the globe; elaborating on, while the crude oil as a risk-on asset which is also denominated in the US currency is normally negatively correlated with the greenback prices, the correlation between the American dollar and US oil reached +0.67 the past trading month. Being more précised, the above figure depicts the strongest observed positive relationship between crude oil and American dollar prices, since not only the beginning of the year, but also over the past decade. The investors should read between the lines to realize, that the benchmark currency due to its exposure to a possible US-based debt crisis has skewed the relationship between itself and oil.
Moreover, gold rose nearly 1 percent on Monday as the ongoing U.S. government shutdown and no signs politicians were willing to resolve a budget impasse and raise the debt-ceiling limit boosted the metal's safe-haven appeal. What’s more, spot gold was up 0.8 percent at $1,321.01 an ounce, having earlier reached its highest since Oct. 1 at $1,327.94. Last but not least, U.S. gold futures for December settled up $15.20 an ounce at $1,325.10. Gold may still find support from expectations for a delay in the Fed’s tapering of its quantitative easing (QE) program taken for granted the government shutdown and the damage it is causing to the American economy, but is still technically trying to find out a fundamental catalyst to make a solid break-out.
Crude ready to test the 104.00 zone; gold seeks a fundamental catalyst for the break-out
At the time of writing, NYMEX Crude oil is trading at 103.74 up (0.06%), while spot price of gold is trading at 1321.86 also slightly up (0.22%). The American dollar has been heading higher today, due to the fact that traders made their best efforts to capitalize their short positions on the greenback; thus the today’s uptrend performance of the American dollar is mostly attributed to profit taking of the market participants. Nevertheless, the dollar fell on Monday, remaining near an eight-month low against a basket of currencies, as the U.S. budget deadlock in Congress showed no sign of breaking. To elaborate on, the dollar index fell 0.2 percent to 79.952, not far from an eight-month low of 79.627 hit on Thursday.
Crude oil futures on both sides of the Atlantic pared losses on Monday after a sharp drop in earlier trade, following a report that a key pipeline delivering crude oil from Cushing, Oklahoma, had resumed shipping after an earlier outage. U.S. crude oil slipped 81 cents to settle at $103.03 a barrel, after trading close to $2 a barrel lower at $101.86 earlier in the session. Furthermore, the contract slipped below the 100-day moving average of $102.45. Finally, Brent crude futures reversed earlier losses to finish up 22 cents at $109.68 per barrel, after earlier trading as low as $107.89. Traders should take upon consideration that the correlation between oil and the American dollar is reflecting to a major extent the turbulence that exist all over the globe; elaborating on, while the crude oil as a risk-on asset which is also denominated in the US currency is normally negatively correlated with the greenback prices, the correlation between the American dollar and US oil reached +0.67 the past trading month. Being more précised, the above figure depicts the strongest observed positive relationship between crude oil and American dollar prices, since not only the beginning of the year, but also over the past decade. The investors should read between the lines to realize, that the benchmark currency due to its exposure to a possible US-based debt crisis has skewed the relationship between itself and oil.
Moreover, gold rose nearly 1 percent on Monday as the ongoing U.S. government shutdown and no signs politicians were willing to resolve a budget impasse and raise the debt-ceiling limit boosted the metal's safe-haven appeal. What’s more, spot gold was up 0.8 percent at $1,321.01 an ounce, having earlier reached its highest since Oct. 1 at $1,327.94. Last but not least, U.S. gold futures for December settled up $15.20 an ounce at $1,325.10. Gold may still find support from expectations for a delay in the Fed’s tapering of its quantitative easing (QE) program taken for granted the government shutdown and the damage it is causing to the American economy, but is still technically trying to find out a fundamental catalyst to make a solid break-out.