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Gold Prices Ease: Gold Prices & Oil Prices

March 12, 2012 by staff 

Gold Prices Ease: Gold Prices & Oil Prices, ARING oil prices and Iranian tensions are a source of increasing angst. Iran produces almost 3.5 million barrels per day and a supply shock would dwarf last year’s Libyan losses.

UBS has warned that crude may top $205 per barrel if Iranian exports cease. The worst-case scenario – a “complete shutdown” of Iranian oil – could see crude hit $270. Bank of America agrees prices could “easily” top $200 if Iran decided to block the Strait of Hormuz, through which about 20 per cent of the world’s oil passes. The oil supplies of Qatar, Kuwait and the United Arab Emirates (UAE) would be “completely” lost, as well as parts of Saudi supply.

An oil spike might be short-lived, however. Global demand shrank in the fourth quarter of 2011 for the first time since 2009. Crucially, while spot crude prices have risen by more than a quarter over the past six months, forward prices for 2015 are trading at a record discount, implying that markets expect prices to eventually fall below today’s levels.

Gloom over gold is premature

There’s been much chatter among technicalanlysts on gold’s declines (it recently suffered its worst daily drop – 5 per cent – in more than three years and also dipped below its 200-day moving average). But, when it comes to gold, the 300-day moving average is the key technical support level. Gold prices fell to this level on 10 occasions between 2001 and 2007 and bounced nicely every time.

One could not say that the metal is in rude technical health but unless the 300-day average about $1,600 is taken out, however, it would be premature to start writing any obituaries.

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