Global markets saw many developments during the week that caused a decline in gold, a rise in bond yields, and a rise in oil.
• Selling pressure continues to dominate gold trading
Gold witnessed selling pressure during the week's trading, and retreated to its lowest level since June 2020. Trading now around $ 1694 an ounce.
US Fed chairman Powell's comments yesterday evening to the Wall Street Journal affected gold negatively, and he failed to address high inflation and rising US bond yields. Powell indicated that the rise in inflation is only temporary, and in the long run inflation rates may stabilize at about 2%, which ultimately supported the US dollar gains and in turn put pressure on commodity prices, especially gold.
• Powell's comments support the US bond rally
Despite the caution taken by investors about Powell's comments on the continued rise in bond yields, he asserted that these increases will not prompt the US Fed to raise interest rates which contributed to the yield hikes, putting further pressure on gold.
Powell said that he learned two lessons from the economic recession caused by Covid-19: "When you have a real crisis, act quickly and do not back down and do not stop until the job is done." Which seems to support the decision to maintain current policies and not raise interest rates.
• OPEC + deal supports oil prices
Oil prices rose to their highest levels in 14 months after OPEC+ agreed to extend the production cut and not ease supply restrictions. Brent crude rose to $68 a barrel, while West Texas crude rose to $64.94 a barrel.
OPEC+ was considering the possibility of increasing oil production by about one million barrels per day (bpd) to one and a half million bpd, while Russia and Kazakhstan were granted exemptions. A meeting is scheduled for the beginning of next April to discuss the production levels during the month of May.
Investors were surprised that Saudi Arabia decided to maintain its voluntary reduction of one million bpd until April, considering the rise in oil prices over the past two months.
"A host of factors have come together to bring the parties together, but the resulting increase in prices will definitely push the parties to change their minds when they meet again on April 1, 2021," Citigroup's commodity analysts said in a note.
• NIO electric vehicle sales rise in the fourth quarter of 2020
On Monday, the electric car manufacturer announced its latest quarterly profits for 2020, and the market value of the company increased from $3.96 billion to $97.96 billion in February 2021.
The report showed that the company delivered 43.728k electric cars over the past year, up from 20.57k cars in 2019, an increase of 111%.
Now, NIO expects to deliver 20k to 20.5k cars in the first quarter of the year, an increase of 421% over the last year, with revenues rising between $1.13 billion to $1.16 billion.
• Impact of Employment Data on the US Dollar
Data released by the US Labor Department showed an improvement in employment during February, as the non-farm payroll showed a rise of 379k, beating expectations that indicated a rise of 197k and the previous reading at 49k.
It should be noted that the labor market sector has succeeded in adding the largest number of jobs since October 2020. Unemployment rates fell from 6.3% to 6.2%, while average hourly earning stabilized at 0.2% as expected.
The US dollar continued to rise against most of the major currencies on the back of this positive data and further improvement in the labour sector, as the euro dollar fell to 1.1890, its lowest level since last November, while the sterling pound fell to 1.3780.
• Selling pressure continues to dominate gold trading
Gold witnessed selling pressure during the week's trading, and retreated to its lowest level since June 2020. Trading now around $ 1694 an ounce.
US Fed chairman Powell's comments yesterday evening to the Wall Street Journal affected gold negatively, and he failed to address high inflation and rising US bond yields. Powell indicated that the rise in inflation is only temporary, and in the long run inflation rates may stabilize at about 2%, which ultimately supported the US dollar gains and in turn put pressure on commodity prices, especially gold.
• Powell's comments support the US bond rally
Despite the caution taken by investors about Powell's comments on the continued rise in bond yields, he asserted that these increases will not prompt the US Fed to raise interest rates which contributed to the yield hikes, putting further pressure on gold.
Powell said that he learned two lessons from the economic recession caused by Covid-19: "When you have a real crisis, act quickly and do not back down and do not stop until the job is done." Which seems to support the decision to maintain current policies and not raise interest rates.
• OPEC + deal supports oil prices
Oil prices rose to their highest levels in 14 months after OPEC+ agreed to extend the production cut and not ease supply restrictions. Brent crude rose to $68 a barrel, while West Texas crude rose to $64.94 a barrel.
OPEC+ was considering the possibility of increasing oil production by about one million barrels per day (bpd) to one and a half million bpd, while Russia and Kazakhstan were granted exemptions. A meeting is scheduled for the beginning of next April to discuss the production levels during the month of May.
Investors were surprised that Saudi Arabia decided to maintain its voluntary reduction of one million bpd until April, considering the rise in oil prices over the past two months.
"A host of factors have come together to bring the parties together, but the resulting increase in prices will definitely push the parties to change their minds when they meet again on April 1, 2021," Citigroup's commodity analysts said in a note.
• NIO electric vehicle sales rise in the fourth quarter of 2020
On Monday, the electric car manufacturer announced its latest quarterly profits for 2020, and the market value of the company increased from $3.96 billion to $97.96 billion in February 2021.
The report showed that the company delivered 43.728k electric cars over the past year, up from 20.57k cars in 2019, an increase of 111%.
Now, NIO expects to deliver 20k to 20.5k cars in the first quarter of the year, an increase of 421% over the last year, with revenues rising between $1.13 billion to $1.16 billion.
• Impact of Employment Data on the US Dollar
Data released by the US Labor Department showed an improvement in employment during February, as the non-farm payroll showed a rise of 379k, beating expectations that indicated a rise of 197k and the previous reading at 49k.
It should be noted that the labor market sector has succeeded in adding the largest number of jobs since October 2020. Unemployment rates fell from 6.3% to 6.2%, while average hourly earning stabilized at 0.2% as expected.
The US dollar continued to rise against most of the major currencies on the back of this positive data and further improvement in the labour sector, as the euro dollar fell to 1.1890, its lowest level since last November, while the sterling pound fell to 1.3780.
