20.05.2016 - Oil prices regained position
The price of gold continued to fall against the strengthening of the US dollar and rising probability of the Fed raising interest rates in June. We recall that the main factors that are necessary to raise interest rates is the improvement in the labor market and inflation to the target level of 2.0%. Rising oil prices strongly support the growth of the consumer price index, which will allow the Fed to raise rates, which will reduce the attractiveness of gold compared to fixed-income assets. Support for gold can be a correction in the US stock market, which will increase the demand for defensive assets. Our medium-term outlook remains negative with a potential reduction up to 1100 dollars per troy ounce, but we do not rule out the resumption of growth up to 1300 dollars per troy ounce.
The price of Light Sweet crude oil restored previously lost ground against the background of oil supply disruptions in Nigeria due to attacks on oil infrastructure in the country, a decrease in supply from Canada on a background of forest fires and the tense situation in Libya. At the same time, Iran continues to increase the volume of production. Given the temporary supply disruptions of crude oil and production growth in OPEC countries and Russia, we expect a drop in oil prices in the coming weeks, but do not rule out growth of up to 50 dollars per barrel in May.