Oil and precious metals prices, when this madness will stop?

Oil and precious metals prices

Oil and precious metals prices, when this madness will stop?

Back in 2008, Goldman Bank forecast that the oil barrel would be worth approximately $175 per barrel, and this year it has made the same forecast. It won’t be a surprise when oil barrel prices rise to that price. On the other hand, JB Morgan has its own forecast which indicates that by the end of 2022, oil barrels will be worth $185 per barrel.

Today’s oil prices are approximately the same as 2008 prices, considering the inflation and its effect. This week the most alarming news was about energy prices and how trembling they were. No sane person will deny how crazy this week was for the energy industry. The violence in the war is escalating day by day. The Russian military forces are still pushing and implementing aggressive military assaults on the Ukrainian capital. The Ukrainian defense is still fighting back, showing remarkable courage and restraining against an army that, at least, you can say, outnumbers him in power and abilities.

West Texas crude and Brent have already shown a mixed performance this week. Reaching new highs and declining the day after. 

The U.S president this week in his latest speech said that Europe might suffer more in terms of oil and gas supplies. Because Russia is Europe’s largest oil and gas supplier, US sanctions against Russia have put importer countries in a difficult position.

The demand remains the same, yet after this week, experts forecast that there will be a decline in oil and gas demand. Several airline companies had to delay their scheduled trips due to the current crisis and the high prices.

Is gold affecting the S & P index and pushing it into correction territory?

The inflation danger is threatening the economic recovery both locally and globally. Will that mean the 2008 recession will hit again? It all started the same: increases in real estate and housing, increases in oil and gas, goods and services. The COVID virus has already affected our economic health. Now investors are selling their stocks and shifting to safe assets like gold.

Gold and precious metals are considered heavenly assets and usually jump in price in times of war and economic downturns. Since January 2022 S&P index fell about 12% into the correction territory. Investors felt the danger of losing money and sold their stocks to replace them and bought gold as a safe asset. That is one factor that could explain why S&P and Dow Jones indexes are declining, because of the high risk they carry.

Gold is nearing $2000 per ounce, a record high in decades, but the question is whether it will rise further in the future.

Gold prices will only increase when the stock market crashes, declines or is in times of war. Because gold has a lower risk and volatility rate, Yet, its prices will drop if the war stops, at least the military operations stop. Yet the possibility of higher increases remains solid because no one knows when this war will end and its effect on the global macroeconomic system.

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