30.03.2015 - Falling of oil prices continued
The price of gold decreases against the strengthening of the US dollar. In addition, the demand for the yellow metal, caused by the deteriorating situation in Yemen, partly decreased. Geopolitical tensions traditionally lead to short-term price fluctuations, but to change the medium-term trend, are needed additional factors. Reduction of corporate profits in the US increase concerns about the overbought country's stock market. In case of a fall of indexes, the demand for gold will rise despite the expected rise in interest rates of the Fed. Demand for gold in Asia and from investment funds weakens. We maintain a positive medium-term outlook for gold, but we can see continued downward momentum in the near future.
The price of oil resumed its decline after decreased investors' concerns about the negative impact of the conflict in Yemen. In addition, this week there is a possibility of reaching a consensus on Iran's nuclear program, which will lead to the easing of sanctions against the Islamic republic and increase of the supply of oil on the market. The weakening of the growth of the US economy and reduced forecasts for the 1st quarter of 2015 is negative for oil prices. We recall that the US is the largest consumer of oil in the world. Our medium-term outlook remains negative and we recommend holding short positions on Light Sweet crude oil with a potential drop to $ 40 per barrel.