06.10.2014 - OPEC countries continued the price competition

The price of gold fell sharply amid strengthening of the US dollar. The reason for the rapid growth of the American currency was reducing unemployment to 5.9%, against 6.1%. Thus, the index is now on the minimum level since 2008. In addition, the number of jobs has grown to 248 thousand, against the expected growth to 216 thousand. Price reduction below the psychologically important level of $ 1,200 per troy ounce gives reason to expect continuation of reduction to 1180 dollars per troy ounce. In spite of this, we recommend to accumulate positions in gold in connection with approach of the price to the average level of gold production price near $ 1,100 in connection with the predicted growth in demand in China and India due to the holiday season. Increasing interest in gold can also be caused by the fall on the stock markets and rising geopolitical tensions in the world. We maintain our positive medium-term outlook for gold.

The price of oil continues to fall against the strengthening dollar, as well as in connection with an increase in the supply of oil on the market and low demand in China and Europe. The main driver of the decline is the growth of production of OPEC countries to 30.96 million barrels compared to the limit of 30.00 million. Oil production in the United States is at its highest level since 1986. Saudi Arabia has reduced the prices for Asian consumers, indicating the price competition between the countries of OPEC. We expect a further decline in oil prices and recommend holding short positions.

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