Trump team collapses gold price strong to meet the Fed oil price tumbles OPEC today difficult to solve the dilemma

Precious metal

Last week, gold was significantly improved both in terms of fundamentals and technology. The price of gold broke through the 200-day moving average. The strong rising momentum mainly comes from two aspects: the European and Japanese central banks continue to keep interest rates unchanged and maintain accommodative policies, and are not eager to reduce QE; The US White House’s political situation was unstable. After the Trump medical insurance proposal was again frustrated, the “TongRumen” became more and more fierce, and the Trump son-in-law was also listed as the subject of investigation, while the White House spokesperson Sean Spicer’s The "flash" made the outside world feel awkward, the market risk aversion has warmed up, and the dollar continued to be suppressed, supporting the formation of gold.

COMEX August gold futures closed up 9.40 US dollars last Friday (July 21), or 0.8%, to 1254.90 US dollars / ounce, the sixth consecutive trading day rose, the longest increase since the week of May 17 The number of days, which hit a new high since June 23, rose 2.2% last week, up 1.5% the previous week; silver futures for September delivery rose 11.2 cents on Friday, closing at $16.457 per ounce, or 0.7%. Last week, it also rose by 3.3%. International spot gold closed up 26.30 US dollars in the week ended July 21, or 2.14%, to close at 1254.70 US dollars / ounce. Gold has surpassed the 200-day moving average for three consecutive trading days and is now above the 50-day moving average.

At 10 am local time on Friday, President Trump appointed hedge fund tycoon Anthony Scaramucci to replace the White House Communications Liaison Officer. About 10 minutes before the announcement of the news, the White House spokesperson, who was also the former White House Communications Liaison Officer, announced his resignation. Some sources said that Trump had asked Spicer to continue to serve as a spokesman for the White House and proposed to retain it, but Spicer thought that Trump’s decision was a major mistake and insisted on resigning as a White House spokesperson. After Spicer announced his resignation, the US dollar index fell to 0.4%, refreshing the low since June 24, 2016 to 93.86. Spot gold rose to over $10 or nearly 1%, refreshing the high since June 26 to $1255.80 per ounce.

However, the recent rise in gold prices has begun to show the impact on demand for physical gold. India’s gold demand, the world’s second-largest gold consumer, has begun to weaken, and local gold prices have posted a discount of around US$1/oz. Indian gold sellers expect that demand for gold will be weak in the next three to four weeks and may not improve until late August.

The latest report from the US Commodity Futures Trading Commission (CFTC) shows that as of July 18, speculative holders held a speculative net long position in gold of 122 lots to 60,138 lots; speculative holders held silver speculative net long positions. Reduced 4,629 hands to 9,376 hands.

Looking ahead this week, Kitco's weekly gold survey released on July 21 showed that Wall Street professionals and ordinary investors agreed that the gold rally will continue due to the continued shocks of the US White House, the weakening of the US dollar and the technical advantages of gold. According to the latest survey released by Bloomberg last Friday, European Central Bank President Mario Draghi said that policymakers are still waiting for inflation to rebound, and will discuss the stimulus in the fall. Traders and analysts continue to see more gold prices this week. See more for the fifth consecutive week.

However, investors need to be cautious that gold has risen too strongly last week, which may trigger a profit-taking, and the Fed FOMC will hold a meeting on interest rates this week, July 25-26. It is also a test, so some analysts believe that gold may be consolidating this week, and the rally will be suspended. In addition, a series of economic data will also trigger some market volatility, key reports include home sales data, manufacturing initial value, consumer confidence index, durable goods data and US second quarter GDP revision.

Energy class

As OPEC's supply this month is expected to hit a new high in the year, the number of drilling in the United States is difficult to change bearish sentiment. Oil prices fell about 2.5% last Friday. However, the continued decline of the US dollar still provides some support for oil prices. WTI September crude oil futures fell to a one-week drop last Friday, closing down 1.15 US dollars or 2.45%, to 45.77 US dollars / barrel, down 2.1% last week; Brent September crude oil futures closed down 1.24 US dollars or 2.52%, At $48.06 per barrel, it was down about 1.7% from the previous week.

According to Petro-Logistics, an oil consultancy, the average daily crude oil supply of OPEC members has exceeded 33 million barrels since the beginning of this month, which is more than 600,000 barrels higher than the average daily level in the first half of this year. This month's supply is expected to hit a new high for the year, with supply mainly coming from Saudi Arabia, the UAE and Nigeria, which is exempt from production cuts. Affected by this, the international oil price suddenly encountered a wave of diving. At around 18:30 on Friday, Beijing time, US oil fell from above $47, and oil fell below $49. In addition to the sudden drop in oil prices, the oil market turnover has also risen sharply. According to Bloomberg, the WTI crude oil futures contract reached 8,200 lots in one minute! John Kilduff, co-founder of hedge fund Again Capital, said the market would become very sensitive on the eve of the OPEC meeting, and the market would overreact even if it increased production by 1 barrel.

Although the number of active oil drillings announced by the United States later reduced the short-term decline in oil prices, it still could not alleviate the bearish sentiment in the market. Baker Hughes data showed that as of the week of July 21, the number of active oil drilling in the United States decreased by one to 764, the second week since January. However, analysts believe that this decline is only a temporary adjustment, and the overall upward trend is expected to continue until 2019, compared with 371 in the same period last year.

Relevant data shows that many shale oil producers in the United States have planned to increase capital expenditures in 2017. As the oil price rises, the bank's credit limit has been raised, which is the first time in two years. On the other hand, last week, US domestic crude oil production increased by 32,000 barrels to 9.429 million barrels per day, which increased for four consecutive weeks and continued to remain above the 9 million barrels per day mark. The EIA last week predicted that US shale oil production will increase for the eighth consecutive month, and is expected to increase by 112,000 barrels per day to 5.6 million barrels per day in August. Moreover, although US crude oil inventories fell by 4.727 million barrels last week, the US inventory of about 490 million barrels is still much higher than the five-year average.

Despite this, Bloomberg’s July 21 results show that crude oil traders and analysts have seen US crude oil prices for the tenth consecutive week. Of the 45 traders and analysts surveyed this week, 29 (64%) were bullish, 5 (12%) were bearish and 11 (24%) were flat. Stimulated by the previous resumption of oil prices, the CFTC data showed that as of July 18, the speculative net long position of crude oil held by speculators increased by 38,434 contracts to 396,459 contracts.

The market focus has now been transferred to the OPEC St. Petersburg meeting. The main members of OPEC are scheduled to discuss market conditions with non-member states of Russia in St. Petersburg on Monday (July 24) and whether more action is needed to support oil prices. According to sources quoted by the Financial Times last week, Saudi Arabia is considering increasing production cuts. But the general view in the market is that there will be no change in the production reduction agreement, and analysts doubt whether OPEC will cancel Nigeria and Libya's production cuts. Royal Bank of Canada analyst Helima Croft said that due to the recent announcement of Ecuador's withdrawal from production cuts and the continued increase in production in Libya and Nigeria, the OPEC meeting on Monday will demonstrate the organization's determination to handle additional crude oil production. OPEC will either handle additional production by terminating exemptions from some oil-producing countries or by taking additional measures to reduce production in the future.

In addition, oil market investors should also pay attention to the situation in Venezuela this week. The Venezuelan opposition camp called on the country to launch a new wave of strikes on the 23rd, opposing President Maduro’s constitutional plan to expand his power. Most parts of the country have been paralyzed, and the next strike will be held on the 26th and 27th. A senior White House official said on weekends that the US government is considering implementing financial sanctions against Venezuela and suspending US dollar payments for Venezuela's crude oil exports; sources said the move would severely limit Venezuela's crude oil exports and prohibit use with the country's national oil company PDVSA. The hard currency of the US dollar carries out any related oil trading, which is the most stringent of the various oil-related restrictions currently under study by the White House. The current goal of the US government is to pass the sanctions to the Venezuelan President Maduro to abandon the new Congress.

(Editor: Fang Fengjiao HF055)