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Market News [Market Morning] Biden Meets Powell, Gold Falls Below the $1,840; OPEC+ Considers Exempting Russian Production Restrictions, Crude Oil Plummets!

[Market Morning] Biden Meets Powell, Gold Falls Below the $1,840; OPEC+ Considers Exempting Russian Production Restrictions, Crude Oil Plummets!

On Tuesday, due to factors such as the stabilization and rebound of the U.S. dollar index, the price of gold weakened sharply and fell below the 200-day moving average, hitting a new low of $1,834.96 per ounce in nearly two weeks. It rose to around the 120 mark at one point, but oil prices fell in response to reports that OPEC members were considering excluding Russia from the output deal, which could open the door for other producers to increase production.

TOPONE Markets Analyst
2022-06-01
418

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Spot gold ended two consecutive positive days on Tuesday. During the U.S. session, it expanded its decline, fell below the $1,840 mark, and finally closed down 1.01% at $1,837.4 per ounce. Spot silver continued the decline and finally closed down 1.7% at $21.57 per ounce.


Comment: Gold prices fell nearly 1% to $1,837.21 on Tuesday, after hitting an intraday low of $1,834.96 an ounce, weighed down by a stronger dollar and rising U.S. bond yields, despite concerns about soaring inflation, hurt gold's appeal. Markets were expecting that Biden might urge the Fed to do more to combat inflationary pressures, and as a result, we saw a fairly stable dollar and slight pressure in the gold market.


Suggestion: long spot gold at 1835.00 positions, target point 1865.40


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The U.S. dollar index started a rebound, hitting a high of 102.19 in the day, and finally closed down 0.414% at 101.79. The 10-year U.S. Treasury bond yield rose sharply at the opening, then stabilized in shock, and finally closed at 2.849%.


Comment: The U.S. dollar strengthened across the board on Tuesday as U.S. Treasury yields climbed and fears of further acceleration in global inflation weighed on investors' risk appetite. The dollar was supported by safe-haven demand. U.S. stocks fell on Tuesday as soaring oil prices and hawkish comments from a Federal Reserve official spooked investors.


Suggestion: short EUR/USD at 1.07300, target point 1.06620


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The two oil prices rose first and then fell in terms of international oil prices. WTI crude oil once approached the $120 mark, and in the U.S. session, all gains in the day were pared back, and finally closed down 1.88% at $115.43 per barrel; Brent crude oil closed down 4.49% at $116.21 per barrel.


Comment: Oil prices fell on Tuesday after reports that some oil producers were exploring the idea of suspending Russia's participation in the OPEC+ oil production agreement. OPEC+ comprises the Organization of the Petroleum Exporting Countries (OPEC) and oil-producing allies led by Russia. Suspension of Russia's OPEC+ qualification may be a precursor to Saudi Arabia and the UAE wanting to use their spare capacity, as they will feel they no longer need to endorse a production quota agreement in Russia's interests


Suggestion:  long U.S. crude oil at 113.900, and the target point is 118.500.


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U.S. stocks closed, the three major stock indexes closed lower across the board, the Dow closed down 0.67%, the S&P 500 closed down 0.63%, and the Nasdaq closed down 0.41%. Popular Chinese concept stocks bucked the trend and closed on a large scale. E-commerce stocks Pinduoduo and JD.com both closed up more than 4%, Alibaba rose nearly 3%, and "Weixiaoli" closed higher across the board, of which Weilai closed up more than 5%.


Comment: By the close, energy was the biggest loser of the 11 S&P 500 sectors, down 1.6%. The only gainers were consumer discretionary stocks, up 0.8%, Amazon was the biggest boost to the S&P 500, communications services rose 0.4%, and Google gave the S&P 500 its second-biggest boost.


Suggestion: Go short at 33183.5 of the Dow Jones Index, target point at 32742.7.


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U.S. media: OPEC considers exempting Russia from the oil production agreement


OPEC members are considering exempting Russia from an oil production deal, which could open the door for Saudi Arabia and the United Arab Emirates to produce more oil, sources said.


Biden: Respect the independence of the Fed; the Fed has the main responsibility for controlling inflation


On Tuesday, U.S. President Biden met with Federal Reserve Chairman Powell at the White House. Biden said that the independence of the Federal Reserve is respected, and the Federal Reserve bears the main responsibility for controlling inflation and should use its policy tools to deal with the problem of high prices.


Fed's Bostic: The idea of suspending interest rate hikes in September has nothing to do with 'bailout.'


According to the Wall Street Journal, Atlanta Fed President Bostic said inflation could drop significantly this year. He also clarified that the idea of a September pause (rate hike) is not related to any imminent "bailout."

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