Gold and oil down, but which will rise in the near future?

Published: 11 March, 2015 13:33

Gold news

This morning online commodity traders woke to a fresh shock, another price drop in gold, a new four month low, completely wiping off all profits made in 2015. This was the seventh consecutive day of trading loss. Gold futures for April fell to $1,160.10.

Reasons for pressure on gold

The world economies are slowing, inflation is low, and gold has always been used as a hedge against rampant inflation.

Industrial demand is down as well according to the World Gold Council.

Gold is priced in dollars, and the dollar is now trading at an 11 year all time high, the USD is now worth 22% more than a year ago. A robust dollar usually means a depressed gold price. And the expected rises in US interest rates, which will strengthen the dollar even further has put even more pressure on gold. Increased interest rates make investors lean towards stocks that give dividends, or investments that give interest. So every drop in price frightens investors away to safer yield bearing investments.

Oil news

The closure of several oil fields in the Middle East, and the reduced US stock could give oil prices a lift, Brent crude is now nearly $57 a barrel, but a raised value is expected after news of the inventory fall is absorbed by the markets.

Today’s update that China’s demand for oil rose by 4%, after a slowing of growth that lead to reduced consumption will also add impetus for an expected oil price boost.

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