Gold News: Key Developments To Watch This Week For Gold And Oil
Gold News
Gold prices fell last week for its second weekly drop in a row, as analysts speculated that interest rates would rise during the current year after the most recent Federal Reserve meeting. The higher borrowing costs hurt the value of gold, since it only provides returns through price gains. The price did slightly recover after the US said the economy contracted in the first quarter, mostly because of a harsh winter. The stalled growth of the economy makes increased interest rates far from certain.
Gold has found a key support level at the $1,170 level, and the negativity around the precious metal is already priced in. The commodity could rise this coming week due to a variety of different reports. The European Central Bank will make an interest rate decision on June 3rd, the Bank of England will make its own interest rate decision a day later, and US employment data will be released a day after that. Analysts will also monitor developments in China, where a surging equity market has limited the country’s demand for gold.
Oil prices, meanwhile, jumped on Friday due to an unexpected drop in US drilling activity. The number of US oil rigs fell by 13 last week, falling to its lowest level since August 2010. Oil producers have cut back on spending due to falling oil prices, but many analysts had thought that the US activity had bottomed out. The recent news shows this isn’t true, though, and supply continues to outweigh demand. Analysts will be watching the Organization of Petroleum Exporting Countries meeting on June 5th for any clues about its next moves. Its decision last year not to cut output in the face of increased US production caused prices to fall precipitously.