Gold and oil are shining - April 08, 2018

Gold and oil are shining

Oil and gold rebounded in the last months. Brent Futures prices are at heights that haven’t been seen for long years. Gold historically goes strong at the beginning of the year, but its winning streak seems to be longer. The new-found inflation may help these instruments further.

Investors are rediscovering oil and gold and both of which prices are going up. Inflation in the US, which has just started again, helps this process. These instruments are already having a great time, and their shine may last longer.

Oil on the rise

Black gold may not shine as bright as it did before 2014, but its prices have been rising significantly for the last months. Ever since 2014, its price was falling: from $120 it went down to $40-50. Oil stayed there for a long time, too: prices only broke out in the last months. In March, Brent Oil Futures’ price even broke the $70 barrier for a while. Prices this high were not seen for several years.

Rise in Brent Oil Futures price since 2017

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This may be connected to several things. The fight of OPEC countries to raise prices with holding back their oil production can be one. This seemed to be a futile attempt for a long while, but now prices do go up. Oil was also severely low-priced in the last years and a rise was expected by many. At the beginning of the year, we wrote about this, and now it seems to be here.

Gold is still going strong

Gold has a very special property. It keeps its value even if its price can and does change. On the long-term, gold has the capability of “paying” a return at the rate of inflation. This is an important reason why it’s preferred by investors when stocks are doing moderately, like now.

Rise in Gold Futures price since December 2017

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Gold indeed became favoured in the last months and it’s still in an upward trend. Ever since the beginning of December, the precious metal is going up. The beginning of the year is historically a good period for the metal, but global phenomenon helps its rise this time.

The streak may go on

Oil’s and gold’s shine may continue in the future. Inflation appeared again globally, which usually raises the price of oil. It also has a positive effect on gold. A weaker USD and a correction on stock markets are also helping the precious metal greatly.

Looking at global economy, it’s fair to expect that these two instruments will have a good time in the near future.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.