Oil Prices Collapse

Cassie Bastien

5/4/2017 2:01:18 PM

Daily Gold & Silver Market Report – 05/04/2017

According to Julia Simon with Reuters, “oil prices collapsed on Thursday to their lowest since late November as investor worries about the world's stubbornly persistent glut of crude erased most of the gains that followed last year's OPEC's output cut.” Simon also mentioned the decline worsened after OPEC delegates downplayed the possibility of oil-producing countries deepening output cuts when they meet May 25. Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics, said, “Persistent growth in U.S. oil production...will also make extensions of the OPEC cap beyond 2017 unlikely.” Even so, Tradition Energy Manager of Market Research Gene McGillian said, “We still have a near record overhang and signs of increasing production in areas of the world outside the producers that agreed to the cuts.”

• U.S. crude CLc1 fell $1.93 or 4.1 percent to $45.89 per barrel, by 12:40 p.m. (ET)
• Brent was down $1.95, or 3.9 percent to $48.83 (Reuters.com).

Gold Prices Are Walking a Tight Rope

Spot Gold prices dropped Wednesday evening following news from the Federal Reserve intending to keep its target for interest rate hikes. In an email Wednesday, RJO Futures Senior Market Strategist Phillip Streible told CNBC the jobs report results Friday, along with geopolitical concerns, could be catalysts for Gold, often seen as a safe haven. He wrote, “If we see a big miss in the jobs report, followed by a more hostile situation in North Korea and further unwinding of the EU, then Gold could see a complete turnaround and threaten $1,300 [per ounce]. Either way, Gold is walking on a tight rope.” Investors expect more positive economic data than negative, which Gina Sanchez, CEO of Chantico Global, says conventional wisdom would suggest is a negative for Gold prices. Conversely, investors could be expecting too much from the economy and its growth, which could help spot Gold if economic data fails. On a technical level, Rebecca Ungarino with CNBC, says, “Gold did something on Wednesday that could indicate weakness for the metal, which has risen more than 8 percent year to date.”

Silver Prices Close to 5-Month Low

After the Federal Reserve announced there will be upcoming interest rate hikes despite the slowdown within the economy, Silver prices are treading near five-month lows as investors are cautious. Economic Calendar Market Analyst Sam Bourgi said, “Silver’s value has dropped more than 10 percent over the past two weeks, reflecting continued volatility in the commodities market.” According to Goldprice.org, the Gold/Silver ratio used by investors to buy and sell Precious Metals closed at 76.60 Wednesday, which was the highest level since July 2016. With that being said, the U.S. dollar index reached near two-week highs following the Federal Open Market Committee decision, which Bourgi says “was last seen trading at 99.14, down 0.1 percent from the previous session.” Investors and markets worldwide are turning their attention to a government non-farm payrolls report scheduled for release Friday, which is expected to show the creation of 185,000 jobs in April, according to a median estimate of economists polled by Bloomberg.

At 3:01 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,228.50 Down $21.30
• Silver, $16.36 Down $0.25
• Platinum, $902.90 Down $02.50
• Palladium, $805.60 Up $01.30

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