Oil:
Oil has gained these past few days trading above 87$ a barrel on Friday. Results from China have highlighted speculation for another stimulus there. China’s 7.6 % growth rate appears to be a bit slow to the West where expectations for the country are much higher.
Results this past year from all BRIC countries have been disappointing and have led to increased pressure to add more stimulus to the global economy. This comes about due to LTRO expectations in Europe, QE in the US, the asset purchase program in the UK, and now figures from China.
It will be interesting to see for how long the news from China will appreciate oil and what counter reactions will be provided by Western leaders this week.
The biggest question concerning oil now is whether weak results will be instigators for stimulus, or whether we should expect low demand for oil and therefore lower prices.
Gold:
Gold passed through the1590$ barrier last Friday after the news from China and stimulus expectations.
Expectations may rise even more depending on news from the speech of Federal Reserve Chairman Bernanke. If neither QE nor an extension of Operation Twist is suggested, then investors can highly expect news from China to fade away. This would bring the price of gold to last week’s mid-week levels, or perhaps even lower.
With low inflation, gold will have a tough ride. For now strong resistance around 1590$ could be broken only after strong financial announcements or reports.