Source: Wind

Hong Kong's Wande News Agency reports that the recent outbreak of the European and American banking crisis has had a significant impact on crude oil and gold prices. Gold broke through 2,000 US dollars earlier today, the highest in a year; while crude oil has plummeted in recent days, and the market will pay attention to the impact of this on central bank policies around the world.

Affected by turmoil in the banking sector, the price of Brent crude oil fell below $72 per barrel during the intraday period. Earlier, the contract price of Brent crude oil for May delivery was $71.64 per barrel, down $1.33 from last Friday's closing.

Over the past two weeks, mainly technology startups$SVB Financial (SIVB.US)$went out of business,$UBS Group (UBS.US)$The acquisition is in trouble$Credit Suisse (CS.US)$With such events, oil prices are under pressure due to the Western banking crisis. According to media reports, some influential people within the OPEC+ alliance said that uncertainty in the banking industry is increasing people's concerns about a financial collapse such as the 2008 crisis.

One of the sources pointed out that the drop in oil prices may be temporary because it is not supported by supply and demand fundamentals surrounding spot commodities, but he stressed that it is necessary to monitor the potential impact of falling oil prices on central bank interest rate decisions and inflation. The ECB continued to raise interest rates by 50 basis points on March 16, and the Federal Reserve will also make its own interest rate decision this week.

Over the past year, OPEC+ has supported the stability of oil prices to encourage long-term investment in idle production capacity and avoid supply shortages. UBS analysts pointed out in a recent report that broader financial market turmoil is unlikely to affect crude oil production, but pointed out that “during periods of heightened volatility, investors tend to withdraw risky assets such as oil and invest in safer corners of the market.” He added that the options market is currently hedging against falling oil prices through a number of instruments.

Goldman Sachs analysts lowered their oil price expectations on March 18, citing “bank pressure, economic recession concerns, and investor outflows.”The price of Brent crude oil is now expected to reach $94 per barrel over the next 12 months and $97 per barrel in the second half of 2024, compared to the previous forecast of $100 per barrel for both periods.

Goldman Sachs said, “Our adjustments also reflect weakening fundamentals, that is, short-term inventories are higher than expected, demand has declined slightly, and supply from non-OPEC countries has risen slightly.”

However, the Paris-based supervisory agency International Energy Agency (IEA) said in the March “Oil Market Monthly Report” that growth in global oil demand is expected to “accelerate significantly during 2023.”

Gold became the “big winner”

The price of gold has now declined somewhat, but earlier this day, due to concerns about the banking industry and increased bets on the Federal Reserve's suspension of interest rate hikes, the price of gold rose to a one-year high of over $2,000 earlier in the day.

Spot gold fell 0.25% to $1983.00 an ounce. US gold futures rose 0.73% to $1,988.00 an ounce.

“Due to the banking crisis and market tension, there will continue to be safe-haven demand for gold. Furthermore, increased market expectations that the Fed's interest rate hike will weaken are also boosting prices,” said Carlo Alberto De Casa (Carlo Alberto De Casa), an external analyst at Kinesis Money.

“If the banking crisis worsens, then the price of gold may hit record highs,” According to De Casa. He added that the price of gold saw a profit recovery after hitting the high of the key resistance level of 2,000 US dollars.

Amid the ongoing banking crisis, investors will pay close attention to the Federal Reserve's policy decisions scheduled to be announced on Wednesday. Traders currently expect a 59% chance that the Federal Reserve will keep the current interest rate range unchanged.

In times of financial uncertainty, gold is considered a safe haven asset, and lower interest rates lower the opportunity cost of holding such unprofitable gold bars. After the Bank of Silicon Valley went out of business earlier this month, the price of gold has already rebounded by more than $100.

“Given the global financial turmoil, we expect the price of gold to fluctuate greatly in the coming weeks. Despite this, we expect the price of gold to remain high,” Fitch Solutions said in a report.

Editor/Somer