10.12.2014 - Demand for gold continues to grow

The price of gold continued to rise amid weakening of the US dollar, as well as due to the news from China, where have tightened credit conditions. As a result, the demand for defensive assets grew. Also it is worth noting a positive impact of the political crisis in Greece, the demand for gold. It is worth noting that investors fear a decline of stock markets and investment funds continue to increase gold reserves. Asian demand remains weaker than last year, but also shows the traditional growth in the 4th quarter of the year. We recommend holding long positions on gold and maintain a medium-term positive outlook.

The price of Light Sweet crude oil continues a gradual decline despite the weakening US dollar, which has traditionally supported commodity prices. Investors were disappointed with the decision to tighten credit conditions in China, which is the second largest oil consumer after the United States. In addition, the production of oil from shale deposits continued to grow despite the drop in oil prices. It should be noted that some companies have reduced investment program for next year, but output growth will continue. The imbalance of supply and demand leads to a further decline in oil prices and at the moment there is no reason to talk about changing the negative trend. We recommend holding short positions on oil and keep the medium-term negative outlook with the first target at 60.00 dollars per barrel.

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