Stagnation is the Name of the Game in Terms of Oil and Gold

Published: 9 December, 2015 16:24


In recent news, it has been shown that mining prices have taken massive hits with some companies such as Anglo American down nearly 22 per cent since the start of trading this week. Such negative movements serve to underpin the fact that online commodity trading experts still feel that there is a glut in terms of supply versus demand.

In turn, both oil and gold have once again entered into a more bearish territory (if ever having left this region to begin with during the past few months).

Short-Lived Glory for Brent

Although Brent crude briefly rose above $40 dollars a barrel in Asian circles, many online commodity trading professionals feel that this was only a short rally and the prices are likely to remain stagnant for the remainder of the year.

Once again, this is due to a significant rise in supply in relation to demand. When sluggish Asian growth figures are placed into the equation, the bulls have a long way to go before they are once again in control of oil figures.

Gold: Thin Trading for Good Reasons

Gold has understandably remained in a holding pattern recently; mainly due to the much-anticipated rise in interest rates that is shortly expected to be enacted by the Federal Reserve. Should these rates increase (which is widely expected), the cost to hold gold will make it less of an attractive long-term investment.

Some online commodity traders may very well sell off a moderate amount of their holdings before this action takes place. This sentiment has outweighed short-term buying signals such as changes in demand and geopolitical instability.

While many have been eager for a commodity rally, it appears that we will once again have to wait until the Federal Reserve takes action to fully appreciate how the landscape has changed.

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