Investment Idea

Commodities update 47

29/06/2016 | 2 min read

Oil price decreased, gold price soared

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Gold soared because of the Brexit and reached a 2 year high. The precious metal jumped by about USD 100 on Friday and reached USD 1358 per ounce. The result of the Brexit referendum boosted the demand toward gold which is reputed as a safe haven. The growing demand for gold among investors is inter alia the result of a growing risk aversion towards other asset classes. Another factor, which may support the gold price is the weak May US-Job report which lowered the chance of rate hikes by the fed. Even if gold gained about 25 percent year to date, there may be more potential for the yellow precious metal in future.

Oil prices dropped strong: on Friday WTI and Brent slipped by about 6 percent before stabilizing. On Monday afternoon, Brent noted at USD 48.22 and WTI at USD 47.28 mainly driven by UK's unexpected choice to leave the European Union and concern about the stability of the global economy. Because of the Brexit, USD soared making oil more expensive for investors using other currencies which implies a negative effect on oil prices. According to fundamental data, a further recovery of the oil price could be unlikely. With a Barrel cruising at around USD 50 production is sustainable for Saudi Arabia and Iran which may stimulate production and lead to an oversupplied market pointing to the possibility of falling prices.

Since end of May 2016 natural gas prices in the US raised by about 40 percent predominantly due to a forecasted scorching summer. According to the natural gas storage report of the US department of energy, storage went up in the last month reaching 3.106 billion cubic feet a 19.9% raise in comparison to a year ago. Working gas in storage could decrease if the temperatures in the US rise because of the massive use of air conditioning solutions which are consuming a lot of electricity. However, the future development remains to be seen.