Gold and oil resume bullish directions

Gold and oil resume bullish directions

Gold prices faced substantial gains in early US trading on Wednesday. The US stock market has recovered from the crisis from the previous two days. Meanwhile, crude oil prices are also seeing substantial advances. 

This week, the collapse of oil prices has severely hurt Asian financial markets. Therefore, there could be some demand for safe-havens. 

A weaker US dollar is supporting the precious metals market bulls. Gold Price Slid From 2-Month Highs - MyForexNews

Gold futures for June climbed $40.30 to $1,728.00 an ounce. Silver prices for May contracts increased by $0.274 to $15.15 an ounce.

In early NY trading, the US stock indexes were solidly higher. After substantial losses on Monday and Tuesday, the US stock indexes are witnessing a corrective bounce. 

The US president, Donald Trump, tweeted on Wednesday that he had instructed the US Navy to shoot down and destroy any Iranian gunboats if they harassed the US ships at sea. The marketplace showed a delayed reaction to this declaration. 

The US equity traders are watching corporate earnings reports that have started to come out this week but have so far been mostly overshadowed by the collapse in the global crude oil market. After a while, gold prices saw a little gain, while crude oil prices surged. Both gold and crude were likely reacting more to the rally in the stock market than Trump’s tweet. Still, Trump’s announcement escalated US-Iran tensions. Those tensions will probably get worse and deserve the close attention of traders and investors.

Oil at its historic lows this week

Oil was trading at its historic low at the beginning this week. WTI May futures plummeted at minus $37 but recovered to approximately $10 a barrel. Brent oil futures hit a 21-year low and dropped below $10 a barrel.

It has possibly caused some oil-based ETFs (exchange-traded funds) to near a state of total failure. 

At present, there is a speculation in the marketplace that Asian investors have been hit the hardest. Some Asian markets could even experience a contagion impact. 

Oil prices are solidly higher today. Nymex West Texas Intermediate (WTI) June futures traded with gains of around $2.50 to $11.50. The US dollar index weakened on a corrective pullback from recent gains. The 10-year US Treasury note yield was trading around 0.58% this morning.

The average price for gold in 2021 will be $ 2,063

Gold is currently trading at $1,738.8. The Bank of America forecasted that the price of the precious metal in 18 months would climb to $3000. Gold is one of the main safe-havens of investors in volatile times. If the Bank of America hits the target, that will mean that it was right: The FED cannot print gold, according to the report of the bank in which it predicts this historical price for the precious metal.

Gold serves as a fence against inflation, as protection against uncertainty. During the time of Coronavirus, everyone wants gold. That is the message from the Bank of America.

Analysts state that the average gold price in 2020 will hit $ 1,695 an ounce before rising demand takes it to $ 2,063 the following year.

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