The price of crude oil surged one percent last month after two Saudi Arabian oil tankers were attacked while sailing on their way towards the Persian Gulf, adding fuel to already tensed situation as the United States heightens its pressure on Iran. Middle Eastern oil exporters have started cashing in on the squeeze that was driven by sanctions on Iran and Venezuela by the United States and latest surprising oil supply disruptions in from Russia to Nigeria. The OPEC has said that the demand of oil will rise higher than expected this year as supply of the OPEC and non-OPEC nations are passive.
It can be expected that volatility in crude oil prices might remain the theme of coming trading session due to geopolitical tensions and an uncertain anticipation regarding the trade war outcomes. The main trend is down according to the daily swing chart. A trade through USD 63.96 per barrel will change the main trend to the upward level, while a move through USD 60.10 per barrel will signal a resumption of the downtrend.
The bullion market is not making the expected progress and continues to tread water around USD 1,275 level, and just below the 200 day EMA. The influence of US dollar on the precious metals market still prevails as the greenback has emerged as the worldwide “safe-haven” for investors and governments.
The question now is “what would it take for the yellow metal to revert back to the expected price level?” Will moving away from USD and shifting to other currency help? The volatile situation of the Gold market has raised multiple questions among investors. As, the pressure created by the US Dollar does not bodes well for the demand of gold, in our opinion, the bullion price can go significantly lower in the coming days.
As the world’s largest social media Facebook is also planning to introduce the FB Cryptocurrency by 2020, we can expect this to have a negative impact on the price of the yellow metal.
Latest statements made by US President Donald Trump in resolving the trade war with China quickly acted as catalyst for the surge in the US stock market.
Major US stock indices like Dow Jones and NASDAQ have strongly trended upwards. The current USD index position looks promising in the short-term but sustaining this in regards to external affairs and exporting trade might be challenging for the White House. The current trend is showing that the US Dollar index will reach USD 102-103.
Meanwhile, deteriorating trade relationship between US and China will have some impact on both economic giants. Many think that conditions could worsen for the US economy if the current standoff drags on for long. This could lead to further pressure built up on US Dollar. Investors will be forced to make adjustments to account for a possible interest rate cut by the US Federal Reserve.
The spectacular Lok Sabha elections victory for Indian Prime Minister Narendra Modi and his party BJP has made a very strong impression in Indian stock market. The market went on a bull-run after the results started coming out. The Indian currency is also gaining momentum against the US Dollar.
The policy formulated by the Reserve Bank of India has been strongly implemented resulting in the rupee going up 49 paise to close at 69.53 against the UD dollar in line with a massive surge in domestic equities following a decisive mandate for Modi's BJP in the Lok Sabha elections. We can expect INR to maintain a range of 63-74 against the US Dollar in the upcoming months.