The “Jaws” effect: Gold’s ostinato and Brent

Hany Saleeb Independent Analyst

I believe president Trump is the heaven’s gift to GOLD. The dramatic surge in Gold prices is a confluence of many factors. From new tariffs, to soaring global debt levels, to lowering interest rates, to geopolitical tensions spanning all corners of the globe, to FED losing control, to aggressive money printing, you name it!!

Gold is reminding me of the “Jaws” movie music by the brilliant composer John Williams. Whenever the Shark is near or even appears you hear the famous ostinato, relentless, repeating before the full orchestra erupts. The same goes with Gold.

Gold is leading the scene then the full orchestra of metals and energy commodities is beginning to follow its lead. Every sunrise brings new heights for Gold! Gold is currently trading around 5270 while Brent crude spot (FOB) trading around 73. Gold to oil ratio is one of the basic and classical ratios to keep track. Gold to Brent ratio is currently around 73, two-year average is around 52, three-year average is around 43, and five-year average is around 35.

Gold is outperforming historical averages, and ratios are deviated from the mean. Based on above mentioned ratio levels, I believe the next move for Brent will respect mean reversion logic and head north to 101, 123, and 151 levels respectively.

Author

Hany Saleeb

Independent Analyst

Hany Saleeb is a highly experienced Senior Treasurer. With over a decade of experience in treasury, served as Head of Treasury at BM in France and head of research in Sinai Securities.

EUR/USD makes a U-turn, focus on 1.1900

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GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

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Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.