20.11.2014 - Oil continues to consolidate near four-year low

The price of gold corrected downwards against the strengthening of the US dollar. Minutes of the previous meeting of the Fed have not made clear the situation regarding the timing of interest rate increases. In case of an earlier increase in interest rates, inflation will decline and the demand for gold will fall. Data on the housing market have been mixed. Thus, the number of new home sales fell to 1.01 million, while the number of building permits rose in October to 1.08 million. Today we should pay attention to data on the US labor market (13:30 GMT). Weak data on China's manufacturing PMI, which fell to 50.0 will support the demand from investors, but indicate a possible reduction in the consumption of gold in the country. We maintain a positive medium-term outlook for gold.

Light Sweet crude oil price continues to consolidate near the level of 74 dollars per barrel. US crude inventories rose again. Thus, the indicator increased by 2.6 million barrels, compared with an expected decline of 0.7. We recall that growth of oil production in the US leads to lower price, not only in the US but worldwide. Data on reduction of manufacturing PMI in China, which is the second after the US consumer of oil, adversely affected the mood of traders. Thus, the figure dropped to a critical level of 50.0 which is 0.4 worse than the forecast. Decline below 50.0 indicates contraction in the sector. Investors continue to wait for OPEC meeting on November 27 which will consider the issue of reducing the quotas of the cartel to maintain oil prices. In this regard, we expect growth of speculations before the meeting. We maintain a medium-term negative outlook for oil and recommend holding short positions.

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