Gold, oil, cryptocurrencies. Forecast for November 16-22
In October, gold traded in the $1860-1930 range and ended the month with a 0.3% decline. The volatility of the first half of November pushed back the upper border of the corridor. The trading session last week ended near the $1890 support level per ounce.
In the middle of the week, quotes reacted positively to Joe Biden’s victory in the US presidential election and crossed the 1960 dollar border. The expected difficulties with the recount of votes had little effect on prices. But last Monday, BioNtech (NASDAQ: BNTX) and Pfizer (NYSE: PFE) announced more than 90% effectiveness of the new vaccine. The registration application can be submitted as early as November. And although the mass vaccination will not begin either in the spring, much less this coming winter, gold prices have collapsed by 6% in one day. Until the end of the week, gold tried to regain its position, but managed to regain only a third of the lost space.
Goldman Sachs experts predict the price will rise to $ 2,300 an ounce next year, when real rates fall. At the same time, the bank does not expect a decrease in long-term interest rates, since the latest statement by the FRS signaled that the rate would be kept near zero until there was a significant improvement in the labor market and inflation began to rise.
ANZ Bank specialists predict an increase in the price to $ 2,200 in the first months of 2021. Now the threat of an extension of restrictions due to the pandemic is growing. Despite China’s successes, the global economy is experiencing great difficulties. If earlier it concerned only the service sector, now there are signs of a decline in industrial production. US GDP in the fourth quarter, according to the Bloomberg forecast, may fall by 3.2%, and the eurozone GDP – by 6%.
The market expects that in the United States after the inauguration of Joe Biden, and perhaps earlier, will be adopted a stimulus package for 2-2.5 trillion dollars. It is unlikely that the EU will refrain from expanding the previously adopted size of incentives. And also the EU (and even earlier the UK) may introduce negative interest rates. The Reserve Bank of Australia recently decided to launch A $ 100 billion QE and cut the rate. Thus, the fundamental factors are still on the side of the precious metal.
According to a survey of central bank governors, most expect an increase in gold holdings in their institutions over the next 12 months. None of the respondents predicted a decline. Experts admit the continuation of the period of high volatility, during which the price can go into lower ranges. But Goldman Sachs analysts see signs of increased demand from private investors in both this year and 2021. In our opinion, the current price level is quite attractive, and many investors will not wait for new drawdowns. Therefore, most likely, the demand for gold will remain high.
In our forecast, we expect the price of gold to rise to the resistance levels of 1892, 1895, 1900, 1910 and 1920 dollars per troy ounce.
In the first three days of last week, WTI crude oil broke the price threshold of $ 43, the maximum in the last 2.5 months. A significant adjustment led to the price level of $ 40.15 per barrel.
The oil rally kicked off amid reports of successful vaccine trials. The reason itself is unlikely to pull the price up by 13% amid falling demand, but the pressure on the quotes was too long, and in the last decade of October it was also unreasonably strong. Probably the realization of the fact that it would take several months for the vaccine to be distributed on a large scale sobered market participants, which caused an adjustment in the second half of the week.
The trigger for the price reversal was the report of the US Energy Information Agency, according to which the country’s oil reserves increased by 4.3 million barrels. At the same time, analysts had expected a decrease in inventories by 700,000 barrels compared to the previous week. Oil production in the United States remained unchanged at around 10.5 million barrels per day. The report also says that there will be no significant increase in oil demand in the first half of next year, and world production of raw materials in November could rise by a million barrels per day.
OPEC has downgraded its forecast of a decline in global demand in 2020 by 300,000 barrels per day in relation to its September forecast. According to OPEC analysts, in 2021 the oil market will be able to recover only two-thirds of the entire fall during the pandemic. The report notes that, despite the deal to reduce production, commercial reserves in the world have increased by more than a billion barrels since the beginning of the year. At a meeting in December, OPEC + ministers will consider the possibility of abandoning the 1.9 million barrels per day increase in production previously planned for January 2021.
Against the backdrop of gloomy forecasts from the US and OPEC, China’s data looks especially impressive. In China, the demand for all types of petroleum products, with the exception of aviation kerosene, has fully recovered and even exceeded the last year’s indicators. However, due to weak demand for oil products abroad, the workload of oil refineries also decreased in October, and the import of raw materials into the country in October fell by 15% compared to the previous month. But the supply in the Chinese market is also formed due to its own production, which this year is about 3.9 million barrels per day. The consulting company Rystad Energy predicts an increase in demand for petroleum products in China to 13.5 million barrels per day in the fourth quarter.
Russian Deputy Prime Minister Alexander Novak said that the registration of new vaccines makes it possible to look with optimism at the prospects for the oil market in 2021. But in our opinion, there are few reasons for optimism in 2020. Oil production in Libya has exceeded 1.2 million barrels per day and continues to grow. The extension of November quarantine measures in Europe will also put pressure on quotes.
In our forecast for the coming week, we expect a decline in WTI oil to support levels of 40, 39.5, 39.3, 39 and 38.75 dollars per barrel.
Bitcoin climbed to the $ 16,000 mark last week. Ethereum has stabilized at $ 455. XRP rose to a price value of 27.1 cents. The total cryptocurrency market capitalization has risen to $ 458 billion. The last time bitcoin quotes climbed so high in 2018. According to analysts, the macroeconomic environment created by the pandemic is favorable for cryptocurrencies. Central bank money printing and low interest rates make assets with limited supply more attractive. The experts noted the interest in the first cryptocurrency on the part of institutional investors, having analyzed the activity on regulated platforms and the influx of cryptocurrency funds.
The capitalization of bitcoins tokenized on the Ethereum blockchain has significantly increased, which allow one to conduct settlements in the first cryptocurrency when interacting with De-Fi services. Analysts also pay attention to the differences in dynamics. Since the beginning of the year, Ethereum has risen in price by 350%, while the similar increase in Bitcoin was only 222%.
Altcoin’s appeal is growing as the Ethereum 2.0 network launches on December 1st. Every Ethereum holder wishing to participate in staking can become a validator of a new blockchain and receive about 25% of passive income annually. As soon as the project gains the required number of validators, it will be possible to launch the zero phase of the Beacon Chain, a key component of the new Ethereum 2.0 protocol. But some experts believe that the network in the long term will not cope with the load that the continued expansion of the De-Fi sector can potentially provide.
Ripple’s Q3 financials report a $ 46 million buyback of XRP coins. The company admits that it will continue to buy back tokens in support of its recently released On-Demand Liquidity cross-border payment product. The very fact of purchases can serve as a sign of the potential growth of the coin. However, Ripple may noticeably lose popularity due to the development of the digital yen in Japan. Recall that the leader in the use of XRP in the banking system is Japan, and the initial idea of the Ripple project was to create a centrally issued cryptocurrency for the banking system.
Many central banks assess the risks of introducing official digital currencies, one of which is the outflow of private capital from commercial banks, if the regulator itself can ensure the storage of digital assets on its own resources. Last week an unexpectedly tough position was announced by the Deputy Governor of the Bank of England John Cunliffe. He said that the regulator is not obliged to protect private banks from the dangers that digital currencies carry.
In our forecast for the coming week, we assume further growth of bitcoin to resistance levels of 16050, 16100, 16200, 16300 and 16500 dollars. Ethereum could rise to $ 460, 465, 475, 485 and 500, and XRP to 27.30, 27.50, 27.75, 28 and 28.50 cents.