Forecast for the week from March 29 to April 4 - what to expect?
In the past three weeks, the price of gold has been consolidating in the corridor of $ 1700-1755 per troy ounce. Last week, market volatility was low, quotes dropped to $ 1,732 per ounce.
Investors assessed the likelihood and timing of higher corporate taxes in the United States to finance infrastructure projects. Against this background, there was an outflow of capital on the stock market, which could also have a positive effect on the quotes of the precious metal. Earlier this month, the US approved a new $ 1.9 trillion stimulus package, and Biden's team is already working on the next one, which reaches $ 3 trillion. In this regard, inflationary expectations exceeded the 2% mark and continue to grow. But, according to experts, a strong jump in inflation up to 4-5% may be favorable for gold quotes, while moderate growth will have the opposite effect.
Last week, the 10-year US Treasury yield declined to 1.67%. If yields continue to fall, gold prices may strengthen. But the rise in the dollar exchange rate is likely to become an obstacle to the appreciation of precious metals. Last week, the dollar grew even with declining yields. JP Morgan experts expect 10-year bond yields to consolidate in the 1.5-1.75% range in the near future, followed by a rise to the 2% level. Analysts at Deutsche Bank by the end of this year predict an increase in profitability to 2.25%.
Analysts at Swiss bank Credit Suisse lowered their three-month forecast to $ 1,750 and their 12-month forecast to $ 1,700 as capital outflows from gold ETFs continued amid rising expectations for a quick economic recovery. Vaccines and incentive programs attract investment in risky assets to which gold does not belong.
Usually, gold quotes strongly influence the pricing of other precious metals. But since the beginning of the year, gold has lost 8.7% of its value, and iridium has risen in price by 131%, having made the way from $ 2,600 to $ 6,000. The metal is used in the manufacture of displays and spark plugs. Experts attribute the sharp rise in iridium quotations to insufficient investment in the development of platinum, in the production of which iridium is a by-product.
Weakening interest in platinum is due to a decrease in the production of catalysts for cars with internal combustion engines, which are giving way to electric vehicles in the market. The decline in platinum supply also boosted palladium. For example, last week the price of platinum was declining, while that of palladium was growing.
Gold is likely to continue to decline in the short term thanks to the strengthening dollar on the back of the recovery in the US economy. In addition, signs of a recovery in European business have begun to appear.
In our forecast, we expect a decline in the price of gold to the support levels of 1730, 1725, 1720, 1710 and 1700 dollars per troy ounce.
WTI crude oil quotes returned to the range of $ 57-62 per barrel, in which they spent most of February before the price increase. The trades ended at the support level of $ 60.8 per barrel.
Prices dropped 5-6% twice during the week due to concerns about demand on the wave of new antivirus restrictions in Europe, as well as rising incidences in India and Brazil. Added to the problems of demand is an excess of supply, which can be judged by operational data from the United States. The American Petroleum Institute announced an increase in raw material reserves in the country by 2.9 million barrels, and the US Department of Energy - by 1.9 million barrels, while the volume reduction has not occurred for 5 consecutive weeks. Gasoline inventories fell 200,000 barrels and distillates rose 3.8 million barrels.
Given the danger of an increase in the imbalance, at the last OPEC + meeting, participants refrained from increasing production, which led to a 6% increase in prices. The next meeting is scheduled for March 31-April 1. Countries in the group, according to Reuters, are likely to decide to maintain current production levels. Perhaps the agenda will include a discussion of the growth of oil sales by Iran. The OPEC + quota agreements do not apply due to US sanctions on the Islamic Republic, which has gone on to almost openly violate the bans by exporting oil to China. Now her client is India, which is going to cut purchases from Saudi Arabia by a quarter. Due to the sanctions, Iran is forced to sell oil at a discount of 3-5 dollars from the international price, which has probably already helped the quotes go down.
In the Suez Canal on March 23, a container ship ran aground across the channel, blocking the movement of ships, including tankers carrying 4.4% of export oil and its products. The incident caused an increase in oil prices by 5%. The release of the ship can occur from day to day at the peak of the tide or take weeks. By the way, Iran benefits most from the congestion, since unlike Saudi Arabia, the channel is not needed, and the rise in prices caused by the incident is more than satisfied.
The number of active rigs has grown by 6 in the week and 144 since September 2020, according to Baker Hughes. Experts draw attention to the fact that production has since increased from 9.7 to 10.9 million tons and is not growing towards the spring 2020 levels of 13 million tons. Experts have doubts about the possibility of new wells to produce last year's volumes. In addition, from a survey by the Federal Reserve Bank of Dallas it became clear that oil producers are not expecting a rise in prices, are experiencing a lack of funding, are afraid of restrictions on the part of Biden's team and are not going to increase staff. They are forced to think about how to avoid bankruptcy even at relatively high prices.
It is likely that prices this week will be able to rise thanks to another weighted decision by OPEC +, given the new evidence of a global economic recovery.
In our forecast, we expect an increase in prices for WTI oil to resistance levels of 61, 61.2, 61.5, 61.8 and 62 dollars per barrel.
Last week, the dynamics of the cryptocurrency rate remained multidirectional. Bitcoin dropped to $ 55,900. Ethereum has stabilized at around $ 1702. XRP price rose to 55.53 cents.
The total cryptocurrency market capitalization has dropped to $ 1.75 trillion. Bitcoin has been correlated with the S&P 500 since the start of the year, probably because it is also overheated by monetary stimulus. They also showed a synchronous decline last week. According to Santiment, after Bitcoin fell below $ 52,000, the token's circulation rate was low, which investors interpreted as a sign of a near-term price decline. But April, judging by historical data, is a month favorable for the growth of bitcoin, which has already formed expectations of a price increase to $ 80,000. However, the rally may stagnate for a long time, the quotes no longer respond to investments and marketing activities of Tesla (NASDAQ: TSLA) and MicroStrategy (NASDAQ: MSTR), but may grow if the capital of other major players comes.
Experts at the Bank for International Settlements believe that bitcoin can be an investment vehicle, but has already failed as a means of payment due to high volatility. The bank believes that with regard to this function, the asset will easily give way over time to digital currencies of central banks and crypto assets of large technology companies. Earlier, representatives of Facebook (NASDAQ: FB) confirmed their intention to launch the digital currency Diem this year. But last week, Microsoft (NASDAQ: MSFT) President Brad Smith said the currency issue should only be owned by the government.
Many central banks are currently developing their own digital currencies. Last week, the Bank of Japan formed a committee on interaction of the regulator with the government and the private sector, including the banking sector, as the transition to the first phase of testing is scheduled for April. In China, the introduction of the digital yuan has come to a stage, during which private clients of six large state-owned banks began to use cryptocurrency wallets, conducting real transactions for limited amounts, using, among other things, bank cards.
The Cardano token has secured the fifth line of the cryptocurrency rating in terms of capitalization. Cardano developers announced an update coming up for August 2021 that will add the ability to create and execute smart contracts. According to the plan presented, the Alonzo testnet could be launched as early as April. Also, the Cardano developers presented an application that allows you to exchange tokens and can potentially become a competitor to decentralized exchanges on the Ethereum blockchain. More than 100 companies are in the process of switching from Ethereum to Cardano, according to Bloomberg.
In our forecast for the coming week, we assume a decline in bitcoin to support levels of 55,600, 55,300, 55,000, 54,000 and 53,000 dollars. Ethereum could drop to $ 1697, 1695, 1690, $ 1685 and $ 1680, and XRP to $ 54, 53, 52, 51 and 50 cents.