Gold has hit the three-month low as US rate hike looms. Yellen’s hawkish speech on Friday indicated that the Fed should increase interest rate in the coming months if the economy picks up, supporting the case for a rate hike in June or July. Gold price on Monday fell below $1200 for the first time since mid-February, posting a consecutive fall for the ninth day. Higher interest rate will hurt precious metal because they will become less competitive against interest-bearing assets. If US data coming up positive in the following weeks, we will expect gold price to drop further to $1185 and a break of this support level will accelerate the downtrend to $1160.
Oil prices were little changed range bounding near $50/barrel on Monday, as investors holds uncertainty ahead of the OPEC meeting later this week to reach consensus to freeze oil production. The Organization of the Petroleum Exporting Countries will meet in Vienna on Thursday and the issue of oversupply will take the center stage. Crude Oil fell hardly below $30 earlier this year and have rebounded thanks to several outrages because of wildfires in Canada and unrest in Libya and Nigeria, which pushed oil price to a seven-month high over $50 last Thursday. However, as Saudi Arabia and Iraq are standing firm on their production target to retain market share, we are not expecting to see an output freeze to be reached over the meeting. Oil price will hover around $50 if no improvement in the disequilibrium of supply and demand is expected to occur.
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