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US News Turbulence on the commodities market: This is why the volatility of oil, gold and silver can also be an opportunity

05:00  18 september  2020
05:00  18 september  2020 Source:   finanzen.net

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Those assets that have a higher degree of volatility tend to attract those who are active traders rather than investors. When the price of an asset is highly volatile , it While oil and gold are the most liquidly traded commodities , these markets can become highly volatile at times, given the potential

But the recent stock market turbulence has raised new concerns that these automated and algorithmically-driven strategies are Data on the broader pool of passive equity funds with some sort of a volatility targeting “overlay” is sparse, but JPMorgan estimates there is about 0bn just in

For commodity investors, 2020 has been a rollercoaster ride so far. While the precious metals gold and silver have been among the big winners so far, the oil price has been falling rapidly. As experts estimate, however, the increased susceptibility to fluctuations also harbors possibilities.

Thomas Lohnes/Getty Images © Provided by Finanz.net Thomas Lohnes / Getty Images

• Gold and silver with price increases in 2020

• Slump in demand weighs heavily on oil prices

• "Long-term incentive price" as an important investment criterion

Everyone knows that 2020 will be an extraordinary year. The corona pandemic, which is still rampant, has permeated all areas of social and economic life and not only turned the international stock markets upside down. The new starting position has also caused great turbulence on the raw materials markets, which turned out to be positive for some commodities and negative for others.

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Given this significant influence over the oil market , it's important for traders to keep abreast of how Iran would likely see a Biden win as a reason to put more oil on the market , clandestinely or freely. Research Highlights Gold rebounded quickly and broke to higher prices after the COVID deep selling.

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Gold price could rise further

The big profiteers from the corona pandemic on the commodities market are without a doubt the precious metals gold and silver . Both of them had a fabulous rally this year. The price of gold reached a record high of around US $ 2,070 at the beginning of August and even cracked the psychologically important mark of US $ 2,000 per troy ounce. Since then, the price has moved away from its high again, but according to various commodity analysts, the outlook remains good. For example, the Heraeus experts expect the price of gold to rise to 2,200 US dollars in the coming months.

Metals Daily commodity expert Ross Norman also remains bullish, as he told MarketWatch: "The factors that started the gold rally are still relevant." It is common knowledge that the precious metal is in demand as a kind of safe haven, especially in uncertain times. Due to the uncertain progress of the corona pandemic, the uncertainty remains high and with it the need to protect yourself with gold. But not only Corona, the upcoming US presidential elections in November are also contributing to the unrest. In addition, the gold price has benefited in recent times mainly from the ongoing weakness of the dollar. This in turn is caused by the expansionary monetary policy of the US Federal Reserve, which is also fueling inflation concerns. All factors that are likely to push the gold price up further.

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That was after the market found support on Wednesday from Energy Information Administration data See also : Return of Libya’s Oil Is a New Headache for Markets . “The warning from Fed officials certainly Gold Continues Slide on Strong Dollar , Low Rates and European COVID-19 Numbers By

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Silver continues to be in demand

But the little brother Silver has done particularly well this year too. In contrast to gold, silver is not only used as a store of value, but is also used in industry. The economic recovery, which goes hand in hand with falling numbers of new infections, has therefore given the gray metal an additional boost and pushed the price up. Metals Daily estimates that this could rise to $ 35 by the end of the year, which, according to Norman, would represent a "massive increase of 95 percent".

oil price burdened by falling demand

And then there is oil price , which is without a doubt the biggest loser of the year. The corona crisis and the associated slowdown in the global economy led to a slump in demand for black gold. The result: rapidly falling oil prices. So it happened that at the end of April the WTI oil contract for the month of May even turned negative. For the first time, an oil supplier even had to pay money to get rid of his oil at all. Even if it did not look quite so dark for the North Sea variety Brent, it still fell to 19.33 US dollars a barrel at the 52-week low. Since then, oil prices have recovered somewhat, but the outlook does not look good. The Organization of Petroleum Exporting Countries (OPEC) is now assuming that the slump in oil demand this year will be far greater than previously assumed. The oil cartel also revised its forecast downwards for 2021. Here, too, the reason lies in the corona pandemic and the associated slowdown in economic recovery, especially in Asia.

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Hansen described silver as " gold with a little bit of a rocket attached," as it tends to rally "higher and faster" than its pricier peer. This is due to it lower liquidity, although this can also " Gold tends to be less volatile than silver given its superior market size," he explained, adding that the value of gold 's

In commodities markets , speculators also keep markets efficient and stave off shortages of goods by bidding them up when prices fall and financing the middlemen who link supply chains. What is a Speculator? The speculator makes his or her money through buying and selling assets such as

"Incentive price" suggests a recovery in oil prices

However, the current low price of oil does not have to be bad for commodity investors, argues Alissa Corcoran of Kopernik Global Investors to MarketWatch. Because this is currently below the "long-term incentive price". The incentive price indicates how much a raw material must at least cost so that it is still worthwhile for the producers to develop new sources or to maintain existing sources. She sees the long-term oil incentive price at around US $ 75 a barrel, but doesn't think it will stay at that level. Since demand has collapsed, but supply remains high, it is correspondingly less attractive for oil producers to continue to cultivate their oil fields. If some of them close, the supply will decrease and the price is likely to rise again.

This is exactly where the analyst sees an opportunity for investors: "The best investment opportunities arise when raw material prices are traded well below their incentive prices". Accordingly, the short-term high volatility of raw materials is "not a risk, but an opportunity".

In addition to oil, many other raw materials are currently below their incentive price, as Corcoran states in a telephone interview with Bloomberg Daybreak Asia. Here she specifically mentioned natural gas , copper and uranium . Martina Köhler / Redaktion finanzen.net

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