How commodities are responding to the pending US-China “phase 1” trade deal

Sources familiar with the US-China trade deal revealed that the two
countries are close to signing a “Phase 1” agreement that is expected to calm
down the months-long trade war. Comments by the handlers of the deal boosted investors’
risk appetite last week, but a lack of update this week is starting to pressure
energy stocks even as safe-haven assets are trying hard to bounce back.

Gold

Up until August when talks between China and the US began, gold had
been gaining steadily. But with news of a possible “Phase 1” deal in the
streets, investors seem to be abandoning the safe-haven assets such as gold in
anticipation of the stock market correction.

For about nine sessions now, gold has been
trading below the 100-day moving average at 1,480.6 with the lowest price hitting
1439 yesterday.

It appears investors are getting impatient with precious metals
as they continue to abandon their net long positions for the very first time in
a month, this is according to data from CFTC as of November 12.

Yahoo Finance also reported that gold
prices fell last week by the biggest margin in three years even as
investors divested Exchange-traded funds (ETFs).

Crude Oil

For the second time last week crude oil price jumped but the new
week saw West Texas Intermediate (WTI) take a hit, ‘eating up’ up more
than last week’s gain. Yesterday WTI rose to its highest since September but closed
the day off lower after posting a loss from intra-day trading in more than four
weeks.

The US Department of Energy’s recent
data indicated that the country’s production is at a record high. However, as
at last Friday, the number of US rigs in production had fallen below the lowest
ever level since April 2017.

Recent information suggests that Aramco
will not be valued at $2 trillion as earlier communicated by the kingdom’s Crown
Prince Mohammad bin Salman bin Abdulaziz
Al Saud; instead, regulators placed the oil giant’s value at about $1.5
trillion.

Ever since the news hit the markets,
speculative investors have been shying away from oil prospects after being net
buyers for a fifth consecutive week to November 12. Net long positions,
however, are at their highest since September.