Oil Down, Gas Up, Gold Even and USD stronger

By FX Empire Analyst - Barry Norman
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 Gold (1765.05) closed modestly higher, supported by upbeat US data on housing prices and consumer confidence, but declined from the session’s high, pressured by comments from the Philly Fed Plosser.

The Philadelphia Fed president Plosser said in a speech the Fed might have to raise short term interest rates "well before" the current forecast of mid-2015, and predicted the Fed's latest QE3 plan to stimulate economic growth won't be effective.

Confidence among American consumers jumped more than forecast in September as a budding housing recovery and rising stock prices gave households reason to be more upbeat. Public confidence in the U.S. economy is bolstering President Barack Obama’s re-election chances even as Americans continue to view his stewardship skeptically. Americans by 43 percent to 33 percent see themselves as better off rather than worse off since Obama took office in January 2009

Gold holdings  of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,331.33 tons, as on Sept 25. Silver (33.935) holdings of iShares silver trust, the largest ETF backed by the metal, increased to 10,015.99 tons, as on Sept 24.

Globally, central banks seem to be upping their holdings also, with South Korea’s gold reserves increased nearly 30%, from 1.75mn ounces in June to 2.26mn ounces in July, or 70.44 tons. Russia also bumped its gold rainy-day fund to 30,113mn ounces in July from 29,516mm ounces in the previous month, as per IMF. Paraguay raised its holdings by 7.527 tons to 8.194 tons 2-months ago, while Venezuela cut its holdings by 3.733 tons to 362.053 tons in that month, as per IMF.

The dollar index, which measures greenback’s performance against a basket of six currencies, rose to 79.673 from 79.573 in North American trade on late Monday. The euro was 0.2 percent (1.2876) from the lowest level in almost two weeks as weakening economic data and political uncertainty in the currency bloc underscored the deepening impact of the debt crisis. The dollar rose to an almost two- week high against the euro as a Federal Reserve official’s comment the central bank actions won’t boost economic growth outweighed better-than-forecast data on U.S. home prices and consumer confidence

Home prices in the U.S. climbed more than forecast in July from a year earlier, adding to signs that housing will spur economic growth.

Copper futures (3.738) was up supported by gains in the euro against the dollar, after data showed US consumer confidence jumped to its highest in 7-months in September, but major gains were capped by concerns over demand outlook.

Crude oil (90.77) fell from its sessions higher to close lower, after Philadelphia Fed president questioned QE3, pushing the dollar higher. Brent oil rose to $111 per barrel, as escalating tension over Iran offset plentiful supplies and concerns over the health of global economy.

Washington cleared the way on Monday for tighter sanctions against Iran to curb the Middle East state's nuclear ambitions, while Tehran increased its rhetoric against Israel, heightening concerns about a potential conflict. The weekly EIA inventory is expected to show an increase of 1.1m barrels. Natural gas (3.107) closed 3% higher, underpinned by short covering ahead of the October contract expiration on Wednesday, but high supplies, mild weather forecasts and slowing demand continued to limit the major gains.


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