Spot gold had three big negative lines last week. Pressured by unexpectedly strong U.S. PMI data and good news about vaccines on Monday and Tuesday, it fell as much as $45 and $30 per day, respectively, before falling to a weekly low of $1,774.22 before the U.S. market on Friday. Spot gold was down 4.43% on a weekly basis last week. Spot silver also lost $23 last week and has yet to regain that level, falling to 4% last Friday night, a 6.10% weekly decline.
On the crude oil side, assisted by the good vaccine, the U.S. and cloth two oil last week after the opening of the overall higher, WTI crude oil from $ 41.7 near the highest rise to $ 46.2, Brent crude oil from $ 45 near the highest rise to $ 49. However, after challenging $49 last Thursday for cloth oil and $46 for U.S. oil, both fell back a bit. Overall, the U.S. and cloth last week out of the two oil four big positive line, both rose 7%. It is worth noting that the two oils have soared nearly 30% so far this month.
On the foreign exchange front, the U.S. dollar index has been steadily declining since Tuesday last week, closing below $92 on Friday. Most non-US currencies took advantage of the upward trend, the pound was dragged down by the news of Brexit, Thursday and Friday two days to close down.
Bitcoin extended its previous rally from Monday to Wednesday, continuing to challenge the $20,000 mark. But after reaching a high of $19,490, Bitcoin fell hard on Thursday and Friday, reaching as low as $16,317.5, with other cryptocurrencies such as Ethereum following suit. Then on Saturday, Bitcoin recovered again, and had recovered most of last week’s losses by Monday’s press time.
This Week’s Events at a Glance
1) Tonight, prepare for the most important OPEC meeting in history
In reaction to the “OPEC JMMC meeting collapsed”, Monday’s session opened with a drop in oil.
The informal meeting between OPEC and non-OPEC producers, which was rescheduled for Sunday, ended without reaching an agreement on postponing the production increase plan, which, according to analysts, will put great pressure on the OPEC General Assembly to be held on Monday.
A closer look at the developments related to the meeting.
While the majority of participants, including Russia, supported extending the current 7.7 million bpd cut to the first quarter of 2021, the UAE and Kazakhstan opposed it.
The UAE questioned the compensatory cuts, noting that several OPEC+ members have failed to fully comply with the agreement. Libyan officials have also hinted that they will not discuss OPEC’s production limits unless Libya’s production reaches 1.7 million barrels per day, and it is estimated that Libya will ship at least 808,000 bpd of oil in December.
However, Iraq, which had previously criticized OPEC’s “one-size-fits-all” approach, has recently softened its stance, with Iraq’s oil minister saying that he would not ask OPEC to exempt his country from the OPEC+ production cut agreement. Together with the drop in exports, Iraq’s production cut implementation rate improved in November. However, it should be noted that, in addition to the stated production cut target, Iraq was required to reduce production by 165,000 bpd in November to compensate for its previous overproduction.
Even if the current production cuts are extended by three months, one thing needs to be clarified – the quotas of each country. Will all countries have the same quotas for the additional three months of production cuts? Or are some countries being asked to cut more, while others can cut less?
The OPEC ministerial meeting will be held tomorrow at 14:00 Vienna time (21:00 GMT on November 30), which will be one of the most important OPEC meetings in history, and investors should pay close attention.
Will Powell and Nuchin team up again to save the stimulus bill?
Powell will appear before the Senate Banking Committee on Dec. 1 to discuss the new coronary aid bill with Treasury Secretary Nuzin.
This will be the first joint appearance by the two since Nuchin’s surprise request last week that the Federal Reserve return $455 billion in unused loan funds to the Treasury.
Many see Nuchin’s move as adding insult to injury to the U.S. economy in the midst of an epidemic and election transition, but to some extent Nuchin’s rationale for the divestment makes sense, saying that “the funds were very little used” — only $25 billion of the loan was actually spent.
Nuchin further noted that if Speaker Pelosi were willing to compromise, the funds would be reinvested in the stimulus bill.
Sources say that Nuchin has discussed with Senate Majority Leader (Republican) McConnell, who was in charge of the stimulus bill negotiations, the allocation of the funds to potential future stimulus programs. McConnell was very supportive of Nuchin’s actions and said that the stimulus bill should include a second round of small business assistance through the Paycheck Protection Plan (PPP).
(3) Non-Farm Payrolls of all sizes are coming! Which of the conflicting signals will be honored?
Mainstream market analysis expects U.S. nonfarm payrolls to increase by about 500,000 in November, following an increase of 638,000 in October, while the unemployment rate is expected to fall from 6.9% to 6.8%, but total employment will still be well below the peak level of 152 million jobs before the outbreak.
Analysts noted that U.S. employers are likely to increase hiring in November despite a fifth straight month of slowing activity, and that job market conditions have improved following a rebound in household savings stimulus spending and business investment. Last week, the U.S. Markit manufacturing, services PMI preliminary value in November also unexpectedly recorded a strong, and even set a new five-year high, indicating a strong economic recovery signal.
However, some analysts pointed out that the size of the non-farm payrolls is not so optimistic. The epidemic continues to affect a range of industries, particularly the travel and leisure sector. In addition, with the surge in cases, the lockdown measures restarted, the “third wave” of the rising epidemic on the economic impact will be more fully reflected in the December data.
[Hot Species Outlook]
Gold Eyes Three Key Supports as Vaccine Good News Doubts Loom
As a result of the spate of vaccine news since November, spot gold has sold off miserably and has now plunged nearly $300 from its all-time peak in early August. Last Friday’s dive has sent spot gold below its 200-day moving average, which is a dangerous sign. However, the effectiveness of AstraZeneca’s vaccine has been called into question, proving that the vaccine is far from a complete eradication of the virus. In addition, Trump has also threatened to continue fighting the outcome of the election, and his resolve will not change for another six months. The uncertainty created by the epidemic and the election remains.
Goldman Sachs notes that the epidemic has ushered in a new era of policies that target social needs rather than financial stability. Goldman Sachs optimistically expects a “structural bull market” in industrial commodities to accelerate in 2021, with gold, silver and copper all set to benefit.
Christopher Lewis firmly believes that the long-term trend for gold is still up, as central banks continue to inject huge liquidity, but the current apparently elevated risk sentiment is causing gold to cool.
From a technical point of view, Fxempire gold analyst Christopher Lewis believes that the near-term target for spot gold is last Friday’s high of $1818 after a break below the 200-day moving average, which could lead to an upside move; but if it breaks below last Friday’s low of $1774 again, it will continue to move down to $1750, with the next major psychological support at $1700.
OPEC + deep “internal and external worries”, oil prices may fall to the recent range of volatility
Despite no substantial improvement in the fundamentals affecting oil prices, last week saw the strongest recovery in oil prices since the April crash, as sentiment grew optimistic that vaccines are a good start to ending the epidemic.
Brent crude stands hovering around the important psychological $50 mark, waiting for the OPEC General Assembly and OPEC+ ministerial meeting today and tomorrow to find direction.
But in addition to its internal members, OPEC+ will need to keep an eye on the refining situation in the U.S., where the number of wells being drilled has been quietly climbing in recent months. The recent rise in oil prices could push the U.S. rig count even higher. So, despite the positive outlook, commodity analyst firm BCS Global Markets is cautious about the recent rally in oil prices.
Says oil analyst Ron Smith.
The number of wells drilled in the U.S. rose steadily even before the latest rally in oil prices, and OPEC will also be watching for any reaction from U.S. shale oil producers. Oil prices are likely to break through the key inflection point of $50/bbl, accelerating oil drilling activity in the U.S., and oil production will gradually pick up. Combined with the recovery of production in some OPEC countries, this will act as a brake on rising oil prices in the near future.
TD Securities also cautioned that the OPEC+ production plan remains uncertain, and that the current short-term rally in oil prices may be too high, while rising crude oil inventories and continued economic weakness will cause WTI crude oil prices to fall into the recent volatility range.
U.S. indices were hit again, and are expected to end the year with a moderate decline.
The dollar index fell to 91.74 on Monday morning, the lowest level since April 2018. This week, the U.S. will release the November non-farm payrolls report and ISM manufacturing and non-manufacturing data, and ABN AMRO expects that non-farm payrolls will be slightly higher than the market expectations of 500,000 new jobs, while the ISM manufacturing and non-manufacturing data will be lower than the market expectations. Also of concern is whether US states will choose to implement tougher lockdowns after Thanksgiving to contain the second wave of the epidemic.
Although more embargo measures will dampen the U.S. stock market, the prospect that the Federal Reserve is expected to increase market liquidity should dampen the rise of the U.S. dollar; in addition, historically, the U.S. dollar has recorded declines in December in seven of the past 10 years, so it is expected that the dollar will end the year with a moderate decline.
Pound and US await direction confirmation on a mix of positive and negative factors
We’re dealing with two core issues and have an important week ahead of us, the U.K. and the European Union should hopefully agree on fisheries, Foreign Secretary Raab said Sunday. According to the Times, British Prime Minister Johnson is expected to call European Commission President Jean-Pierre Von der Leyen today and tomorrow to try to reach a consensus on fishing quotas.
In addition, the U.K. will be the first Western country to approve a new coronary pneumonia vaccine, with an independent regulator set to do so within days. According to British government insiders, delivery of the vaccine developed by BioNTech and Pfizer will begin within hours of approval. The first injection may begin on Dec. 7, sources said. According to Sky News, British Prime Minister Johnson told conservative lawmakers that the tiered vaccination restrictions will end on February 3 of next year.
The GBP/USD has lacked bullish momentum in the face of a mix of positive and negative factors, but has yet to release bearish signals. On the daily chart, GBP/USD continues to look bullish above the 100-day moving average, but the 4-hour chart shows bearish signals, with GBP/USD falling below the 20-day moving average, while technical indicators are moving downwards. .
Europe and the U.S. defy sluggish fundamentals, may challenge yearly highs of 1.2011
EUR/USD reached a two-month high of 1.1945 last week, and as the dollar weakened, the pair rose despite less-than-impressive economic data from Europe.
Recent macroeconomic data reflect the hit to the European economy. The Eurozone PMI services index is at its lowest level in five years, and services output across the EU is at contractionary levels. European Commission President Jean-Pierre Delay warned last week that excessive easing could lead to a third wave of epidemics after Christmas. Meanwhile, Germany, the eurozone’s largest economy, extended its pre-Christmas restrictions by nearly three weeks to Dec. 20.
Technically, EUR/USD surged after breaking above the 20-day moving average, and analyst Valeria Bednarik expects EUR/USD to continue rising above the line. After breaking through the strong resistance at 1.1960, the next target for EUR/USD is to challenge the yearly high at 1.2011, after which it could approach 1.2100 and then top out. On the other hand, 1.1880 and 1.1790 are providing bottom support below.
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