CRUDE OIL
OPEC production has been ramping up along with Canadian and
Nigerian after recent supply interruptions.
Baker Hughes has reported the U.S. rig count is rising as domestic
producers look to capitalize on stable prices near $50.
Brent could average $85 by
4Q17 and $80–$90 between 2018 and 2021.
GOLD:
RBC Capital Markets,
meanwhile, has upgraded its gold forecast for 2017 from $1,300/oz to $1,500/oz
as fundamental demand for the safe-haven asset remained "steady". The
bank advised investors to buy gold equities on any pullback in market valuations,
which it would regard as temporary in the near-to-medium term.
RBC
based its improved gold price forecast on five key drivers.
First,
it said US real interest rates remained low and the next Federal Reserve Bank
intervention wasn’t likely until mid-2017.
Second,
RBC described central banking monetary policy globally as
"accommodative", with an estimated 38% of developed market sovereign
bonds – worth some $10.5 trillion – currently yielding negative returns.
Third,
real interest rates of -0.42% continued to hurt yields. RBC calculated a
negative real rate of -1% should mean gold moves to $1,546/oz.
Fourth,
there was elevated geopolitical risk in the UK-Eurozone post-Brexit vote, with
elections approaching in Germany and France fanning the flames; while Chinese,
Greek and Italian banks were still a worry.
And finally, gold ETF
inflows would provide a positive catalyst, while the status quo would simply
support current levels.
CAPITALSTARS
CAPITALSTARS
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