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Precious Metals & Energy – Weekly Review and Calendar Ahead By Investing.com

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By Barani Krishnan

Investing.com –  Few thought it would drag out this long when it was proposed back in July.

But here we are, three months later, still discussing it week after week, because it continues affecting gold, equities and the broad macro story in markets more than anything else.

We’re talking about the prospective second Covid-19 stimulus – or rather the lack of it.

This week, negotiations halted again over a successive instalment to the Coronavirus Aid, Relief and Economic Security (CARES) Act – originally dispensed in April – causing another tumult in the gold and stock markets.

This time, it was Treasury Secretary Steve Mnuchin, who unnerved investors while appearing at the Milken Institute’s Global Conference on Tuesday. 

A week earlier, it was Mnuchin’s boss, Donald Trump, who fresh out of hospital and on meds for his COVID-19 infection, announced a no-go in White House stimulus talks with political rival and House Speaker Nancy Pelosi, sending the buy-everything trade crashing. The president recanted that position just two days later after being horrified by the market plunge he caused. The stimulus talks were back on track, sending gold and equity prices back up. 

For context, the U.S. Congress, led by Pelosi and the Democrats, approved the original CARES package in the first quarter, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other  personal aid to qualifying US citizens and residents.

Democrats have been locked in a stalemate since with Republicans, who control the US Senate, on a successive package to the CARES, arguing over the size of the next relief, as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid. Trump, who seeks a second term of office in the Nov. 3 election, has accused Pelosi of playing political football over the issue. The House Speaker retorted that any stimulus should be to the advantage of all Americans, and not for Trump’s political expediency.

After Trump’s back-and-forth last week, it was Mnuchin’s turn to sow fresh doubts on the progress over a new CARES when asked about it at the Milken conference. Mnuchin hinted at a modest and “targeted” package, suggesting that Pelosi move some $300 billion of previously allotted money to needy Americans. His comments again torpedoed gold, along with the , and .

Trump, trailing his Democrat challenger Joe Biden in polling for the  Nov. 3 election, has since pressed for a $1.8 trillion package, rambling that he might even do more than the $2.2 trillion demanded by Pelosi. But the president’s top ally in the Senate, Mitch McConnell, said he could only get votes for a $500 billion deal. 

The net effect? 

A near 1% drop in gold prices for the week, most of it accrued from Tuesday’s 1.8% plunge after the initial push-back on the deal by Mnuchin. 

“With the consolidation in gold having likely run its course, the yellow metal is now tracking closely to other momentum-crash precedents, which suggest continued range-bound markets and consolidation until the next catalyst,” TD Securities said in a note. “With that said, stimulus-on/stimulus-off newsflow impacts price action on a day-to-day within the range.”

But stimulus talks aside, gold has been supported by a spike in European COVID-19 caseloads, as Italy again moved near the danger zone last seen in March while the U.K. and France imposed new movement restrictions. In the United States, new cases are up in 39 of the 50 U.S. states.

“Gold has aligned itself with riskier assets this year so a number of things could be the catalyst for an explosion higher, be it a COVID vaccine, U.S. stimulus deal, perhaps even a smooth uncontested election,” said Craig Erlam, analyst at New York’s OANDA. 

“The downside risks remain considerable though which is why we’re increasingly seeing this fence sitting. No stimulus or vaccine announcement – or further setbacks in trials – and a contested election in the coming weeks at a time when COVID cases are rising fast could be very negative for risk appetite and hit gold hard,” said Erlam, adding that a test of $1,800 was still possible. 

TD Securities also cautioned that prevailing macro tailwinds could prod hedge funds to liquidate gold. 

“Indeed, the trigger to catalyze a modest liquidation now stands at $1893/oz,” said the Canadian bank-backed brokerage. “A trigger of this level could potentially mark peak capitulation as even systematic trend followers would be set to liquidate some gold length.”

There’s no certainty if gold prices, which finished above $1,900 levels on Friday, would return under that in the coming week. What’s certain though is that any stimulus talks in the two weeks to the election would be virtually meaningless. 

On the oil front, crude prices ended the week little changed as a drop in stockpiles of crude and diesel countered concerns about market direction amid surging COVID-19 caseloads.

Global oil inventories, which ballooned in the second quarter as fuel demand collapsed, are currently falling at a clip of around 3 million barrels a day, Gunvor chief executive Torbjorn Tornqvist told Bloomberg in an interview published on Thursday.  U.S. inventories have fallen in all but two of the last 12 weeks, and last week’s declines were considerably sharper than expected.

But while the U.S. drawdowns looked good for supply-demand optics, there were also concerns they could be distorted by precautionary reactions related to the shutdowns forced by Hurricane Delta, which struck Louisiana on Monday as a Category 2 storm.  Nearly 92% of all oil production in the U.S. Gulf of Mexico was shuttered by Delta. With most of those facilities having reopened since, output and stockpiles could rise again in coming weeks.

This week’s global spike in COVID-19 caseloads has also raised alarm across markets. Infections in Italy again moved near the danger zone last seen in March, while the U.K. and France imposed new movement restrictions. In the United States, new cases are up in 39 of the 50 U.S. states.

Precious Metals Review

Gold prices ended a tumultuous week lower as the White House’s back-and-forth on a new coronavirus relief deal hurt those with long positions in the yellow metal.

last traded at $1,902.80, after officially settling Friday’s session at $1,906.40 an ounce on New York’s Comex – down $2.50, 0.1%, on the day. For the week, it fell about 1%.

, which reflects real-time trades in bullion, last traded at $1,900.17- down $8.52, or 0.5%. For the week, it slid 1.6%.

Energy Weekly Review

New York-traded , the key indicator for U.S. crude prices, last traded at $40.77, after officially settling Friday’s trade at $40.88 per barrel — down 8 cents, or 0.7%, on the day. For the week, WTI rose 0.7%.

London-traded crude, the global benchmark for oil, last traded at $42.81, after finishing the session at $42.93 — down 23 cents, or 0.5%. For the week, Brent was down 0.2%.

U.S.  tumbled 3.8 million barrels last week after rising by just over 500,000 barrels the previous week, the Energy Information Administration said Thursday.

The EIA also reported that plunged by 7.2 million barrels for the week ended Oct. 9 versus a slide of just 962,000 in the week to Oct. 2.

Reuters reported that the OPEC+ bloc of producers – whose technical experts met in Vienna on Thursday to discuss the state of the global oil market – fear that a fresh wave of the pandemic will hit demand and end the slow process of rebalancing that has been in progress since the summer. 

The intention of the OPEC+ bloc, which includes producers such as Russia, is to start raising output again as inventories approach their historical norms. Their current deal on output restraint foresees them raising production by nearly two million barrels a day at the start of next year, on the assumption that inventories continue to fall. 

Reuters noted that it’s only the worst-case scenario considered by OPEC+’s experts on Thursday that supply/demand could return to a surplus. Even so, that’s gloomier than any of the scenario entertained by the bloc a month earlier. 

Another factor complicating the supply picture is the return of Libyan production after months of disruption from civil war. The north African country, which is an OPEC member but which isn’t covered by the output restraint deal, is now producing some 500,000 barrels a day and some forecasts say it could rise to 700,000 b/d or more by year end.

Energy Calendar Ahead

Monday, Oct 19

Private Cushing stockpile estimates

Tuesday, Oct 20

weekly report on oil stockpiles.

Wednesday, Oct 21

EIA weekly report on

EIA weekly report on

EIA weekly report on  

Thursday, Oct 22

EIA weekly report on

Friday, Oct 23

Baker Hughes weekly survey on

 





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Commodities

Oil Stockpiles Fell by 1 Million Barrels: EIA By Investing.com

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investing.com — Oil stockpiles declined roughly in line with expectations last week,  according to the Energy Information Administration.

fell 1 million barrels, against expectations for a draw of 1.02 million barrels. That comes a week after crude stocks fell 3.8 million barrels.

Inventory has fallen in all but one of the last six weeks as the economy tries to come back to life after Covid-related shut downs earlier this year. 

, the U.S. benchmark, fell 2% in morning trading ahead of the data release. 

Crude oil stored at , Oklahoma, increased 975,000 barrels compared to an expected build of 1.1 million barrels.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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EU countries back binding green farming schemes By Reuters

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© Reuters. FILE PHOTO: A farmer irrigates his field of potatoes during sunset, in Tilloy-Lez-Cambrai

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By Kate Abnett

BRUSSELS (Reuters) – European Union agriculture ministers agreed on Wednesday to set aside part of the bloc’s massive farming policy budget for programmes that protect the environment.

The EU is nearing the end of a two-year struggle to overhaul its agriculture policy, to attempt to align it with the bloc’s climate change commitments, while supporting farmers’ livelihoods.

The agriculture policy as a whole will suck up roughly a third of the EU’s 1.1 trillion euro ($1.30 trillion) budget for 2021-202, to be split between direct payments to farmers and other support for rural development.

Ministers agreed that 20% of the payments to farmers will be earmarked for green schemes such as organic farming or agroforestry. Farmers will not be able to access the cash for other purposes.

The policy kicks in from 2023 and ministers agreed a two-year pilot phase for the green schemes, meaning they would become binding from 2025. Some countries had raised concerns that tying cash to environmental aims would mean the money was left unspent.

“We can’t simply leave it up to member states to decide whether or not eco-schemes are used and, if so, what money will be made available,” said German agriculture minister Julia Kloeckner, who chaired the meeting.

With agricultural sites comprising 40% of all EU land, farming has a large influence over the health of Europe’s natural habitats.

Agriculture is the most frequently reported threat to nature in Europe, amid intensive farming techniques including pesticides and irrigation, the EU environment agency said on Monday.

Campaigners said the 20% share for green schemes was too low.

“Agriculture ministers are largely perpetuating a farm policy which will throw taxpayers’ money at polluting, industrialised agriculture until at least 2027,” said WWF senior policy officer Jabier Ruiz.

The farming policy negotiations do not end with Wednesday’s deal. EU countries must now strike an agreement with the European Parliament and the European Commission on the rules. Parliament is voting on the policy throughout this week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Gold Up Over Soft Dollar and Rising Stimulus Hopes By Investing.com

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© Reuters.

By Gina Lee

Investing.com – Gold was up on Wednesday morning in Asia, boosted by a weak dollar and the prospect of the U.S. Congress passing the latest stimulus measures ahead of the Nov. 3 presidential election.

were up 0.38% at $1922.75 by 12:26 PM ET (4:26 AM GMT). The was down on Wednesday morning.

The gap between the Republicans and Democrats seemed to decrease after President Donald Trump indicated on Tuesday that he was willing to accept a stimulus package with a larger price tag, saying, “I want to do it even bigger than the Democrats.”

House of Representatives Speaker Nancy Pelosi added to hopes that the stimulus measures would be passed by Congress, saying, “I hope so. That’s the plan,” for an agreement to be reached the following week. Pelosi will continue talks with Treasury Secretary Steven Mnuchin later in the day.

However, with Republicans still opposed to the measures’ price tag, it remains to be seen whether both parties will reach a consensus.

The Federal Reserve struck a positive note, with Chicago Federal Reserve Bank President Charles Evans saying that the current rise in U.S. COVID-19 cases may not dent the recovery too much, remaining “reasonably optimistic” that unemployment will fall to 5.5% by the end of 2021. Evans’ colleagues at the Fed called for more fiscal support to complement unprecedented monetary aid, and the central bank is due to release its ‘Beige Book’ economic survey later in the day.

Across the Atlantic, investors continue to monitor the progress of Brexit talks between the U.K. and the European Union (EU). Both sides called for the other to compromise to save the fast-deteriorating talks.

Swiss gold exports to China and India decreased in September, importing record volumes of bullion from Hong Kong instead and exporting the yellow metal to the U.K., according to customs data. Other data showed that holdings in SPDR Gold Trust (P:) fell 0.23% to 1,269.93 tons on Tuesday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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