(23 September 2020)DAILY MARKET BRIEF 2: Commodities Are Slipping
In the commodity market, all prices are flashing red. Oil prices are declining, as the American Petroleum Institute (API) reported that gasoline stocks in the US dropped by about 7.7 million barrels, which is eight times lower than the expected figure. The decline suggests that the US demand for oil is not recovering. Both WTI and Brent are down over 1%. Also, surging cases in the UK, Spain, and France are adding to worries that demand for oil would be even more affected by the pandemic. The US Energy Information Administration will release data on oil inventories later today.
Gold is extending the bearish trend on Wednesday, dropping to the lowest level since the end of July. The metal is now down 1.49% to $1,879 per ounce.
Gold is losing ground as the US dollar continues to increase. The American currency is supported by robust US housing market data and a weaker euro amid a rapid increase in COVID infections in Europe. Existing homes sales in the US surged to over 6 million in August, the highest figure in 14 years.
Thus, the USD Index is up 0.22% to 94.225, the highest since the end of July. EUR/USD is down 0.18% to 1.1684. Greece and Denmark are introducing new social distancing measures, and many European countries might follow, including Spain and France.
The pound has declined against both the US dollar and the euro, as UK Prime Minister Boris Johnson was forced to impose new restrictive measures to curb the rapid spread of the coronavirus. GBP/USD is about to test 100-day and 200-day moving averages. Meanwhile, the pessimism over Brexit talks persists.
