As of the writing of this post early Monday morning, precious metals spot values are posting mixed earnings. With that being said, however, neither gold nor silver have moved all that much and are not too far from where they began the day. Like last week, this 5-day trading session is expected to be particularly slow and free from any noteworthy, markets-moving economic data.
While this is true, the market does have quite a few geopolitical stories to focus on, most notable of which is the ceasefire agreement in Ukraine. This is currently having a major impact on global markets and will continue to do exactly that so long as the ceasefire holds. Many people, however, do not foresee this most recent ceasefire lasting all that long. I suppose we will just have to see how the week unfolds to really find out what the deal is with Ukraine.
Crude Oil Extends Rally Into New Week
For now, crude oil is trading above $53/barrel and is continuing along its uptrend that has now persisted for about two weeks. Thanks to a host of factors, the price of crude oil has rallied and is looking like it will continue doing exactly that this week.
One of the biggest factors affecting the recent climb by the spot price of crude oil is the fact that a Libyan oil refinery played host to a crippling explosion only a few days ago. The facility, which produces up to 200,000 barrels of crude oil per day, has seen most of its production shut off since the time of the explosion.
In the United States, last week saw the number of deployed oil rigs fall for the tenth straight week. Now, just over 1,000 rigs are operating throughout the United States—the lowest such number of oil rigs in about three years. With demand for crude oil slowly but surely rising and the supply of oil diminishing, it only makes sense that spot values have increased in recent weeks. For precious metals, not only is crude oil’s rally a major factor to pay attention to, but so too is the effect this ongoing rally is having on energy stocks in the US and Europe. Thanks to higher spot values, energy stocks have also seen a price increase.
This week will see investors pay very close attention to the price action of crude oil as it will have a direct impact on the direction in which metals head. This is especially true when you consider how quiet of a week we are expected to have.