07.10.2016 - Gold continues the fall before the report on the US labor market

The price of gold continues to fall due to the strengthening of the US dollar and increasing the probability of the Fed raising interest rates in December. The main focus today will be on the labor market statistics in the US (12:30 GMT). In case of the publication of strong data, we expect a further decline in gold prices, but according to our estimates, this negative dynamics will change after the actual raising interest rates by the Fed, which will lead to a decline in equity markets and increased interest in defensive assets. In addition, the expected increase in demand for jewelry in India and China in the 4th quarter against the background of the holiday season in these countries. Our medium-term outlook remains positive, and we expect a rise in volatility. The current downward trend may continue in the near future.

The price of Light Sweet crude oil has continued to rise, despite the strengthening of the US dollar. The reason for the positive dynamics was the data on oil inventories in the US that fell by 3 million barrels last week, in spite of the forecasted growth. At the same time the support remains hope for a reduction in oil production in the OPEC countries, after at the meeting of the cartel in the end of November will be discussed the details of the agreement reached in Algeria. We are skeptical about the possibility of implementing this agreement and its impact on the situation with an excess of oil on the market. Our medium-term outlook remains negative and the potential of this growth was reduced.

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