The year 2014 so far has been good for gold and oil. This week, both i.e. oil and gold have hit multi-month peaks this on improved demand prospects in the world’s two biggest economies, the United States and China. Also, there is a lot of contribution of poor dollar in the gain the oil and gold have received in the last week.
Earlier on Wednesday, U.S. crude struck the highest level for four months at USD 100.37 a barrel. A similar trend was seen in Brent; it achieved the steepest peak since the start of year at around the USD 110 a barrel mark and according to market observers renewed concerns of colder weather in the U.S. bolstered support for the oil prices.
In its statement earlier the International Energy Agency (IEA) said a pickup in demand in advanced countries, led by the United States is a major reason behind the gain. It says that due to increased demand in the U.S. and other advanced economies even a slowing of emerging market consumption has not been able to affect the oil prices.
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Nevertheless, though the demand for oil have slowed to some extent in developing economies, global oil markets are unexpectedly tight as growth in advanced economies picks up. Major growth has been from China and it is the one that is supporting the oil prices this week. The country has increased its imports in crude oil this week.
According to the data from China it is the world`s top energy consumer. It imported a record 6.63 million barrels of crude oil per day in January, up 5.2 percent from December. Thus, so far the country has played a vital role in the gain of crude oil prices.
On the other hand, gold hit a three-month peak at USD 1,321.52 an ounce which is the highest point since November 7. A similar trend was seen in the prices of silver which gained a three-month high at as it reached USD 21.30 an ounce. According to market observers precious metals are continuing to make up ground lost during last year`s slump.
Market observers believe that a lot of contribution in the increase of gold and oil prices is from weak dollar. The USD has been impacted a lot by underwhelming US economic pointers such as retail sales and unemployment claims.
To contact the reporter of this story: Jonathan Millet at john@forexminute.com
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