Noor Capital | Interview with Mohammed Hashad on Dubai TV – April 24, 2023

Interviewed on Dubai TV, Muhammad Hashad, Head of Research and Development at Noor Capital and the Member of the US Association for Technical Analysts, commented on the most important developments of global financial markets on the first day of the new trading week and most importantly what is happening in oil markets.

Oil Price

Oil is still incurring losses and more losses are even expected in the near future. It is as if oil prices neglect the latest positive economic data and Hashad shared the belief that oil generally lost more than of two thirds of its gains since the decision by OPEC+ to cut oil output. Accordingly, oil was expected to surge, but this didn’t happen and instead, oil price is heading now to the sharpest weekly loss in over one month.

Markets witness one of a few cases when oil prices neglect the positive economic data from the United States including the surging Purchase Managers index data for both manufacturing and services. Oil prices also neglected the Chinese growth data that was positive after reopening the economic activity in China, however the main idea as Hashad believes in that there is a pessimistic sentiment prevailing among all investors under speculations concerning the next step by the Federal Reserve which is believed to continue hiking interest rates for longer in an attempt to tame inflation, and consequently with hiking interest rate this will impact the global demand on oil from the part oh the bigger consumer of energy; namely the United States.

Asked whether the only cause of pressure on oil prices during the previous trading days and why oil was unable to rebound again, Hashad answered that market sentiment in addition to the uncertainty concerning interest rates represent, in fact, the major cause but there are other causes the most important of which is the uncertainty on the global financial scene including political and geopolitical tensions as well as higher oil reserves and despite supplies were cut we see that oil continues retreating.

As for his expectations concerning OPEC+ decision in May and whether OPEC could resort to an additional output cut, Hashad suggests that OPEC+ will maintain the present levels of oil output with no change.

Gold Price

As for gold which exceeded $2,000 per ounce and whether the precious metal is believed to have lost momentum, and any expectations that investors could move from gold to other financial assets in order to keep the latest games, Hashad believes that gold has already recorded it lowest level at $1971 per ounce and the main reason why gold prices retreated was the stronger US dollar which has been supported by higher Treasury yields and it is known that once Treasury yields surge as secured asset, this impacts the attraction of gold for investors. Treasury yields have lately surged to their highest level in one year and markets are pricing that the Federal Reserve as well as the other major central banks globally could continue tightening the monetary policy for longer than expected.

In the United States, interest rates could eventually reach 5.25% and consequently this will boost the US dollar and on the other hand, it could represent additional pressure on gold prices to continue its correction downwards. Hashad also noted that markets could witness gold at $1930 per ounce in the transactions of this trading week.

De-Dollarization Moves

Asked whether the US dollar that recorded its highest on the day’s trading, and this is why there’s pressure on oil prices, but with the emergence of new economic forces, and whether is it potential that US dollar could lose it standing as reserve or even the major reserve currency and even the first Reserve currency worldwide, Hashad suggests that there are no guarantees that could secures the dollar’s standing and prestige in the global financial system.

Hashad also noted that there are moves led by Russia and China to inaugurate their special system concerning international trade dealings and these moves that have been more and more obvious in addition to the US, European debts as well as Western debts general all these factors could represent more pressure on the US dollar in the existence of global economic forces led by China. Hashad believes there are doubts concerning the ability of the US dollar to maintain its standing in the future. There are also other countries that move to present alternative currencies for payment such as the Yuan and the Indian rube. Such moves are expected to pose threats against the throne of the United States dollar in the near term.

Asked about the financial assets that could be considered as the most attractive for investors in the coming period as well as currently, amid retreating gold and retreating oil and whether investors or market participants could move for example to trading in stocks or assets including cryptos, Hashad suggested that apart from crypto assets which involve high risk, investing in stocks and particularly good stocks with satisfactory results and good profits could represent one of the best options for investors. He added that it could be said that investment could prove very attractive in US Treasury yields as secured assets which enable investors to diversify their portfolios in addition to other financial assets.

Asked whether cryptos could fall again after their latest good performance, Hashad believes that crypto assets are expected to encounter further negative pressures particularly amid stronger US dollar and the fact that investors favour to hold away from high risk and particularly investment in Bitcoin and Ethereum.

Eventually, asked about the most important economic data expected in the new trading week, Hashad stressed that markets this week are eying the GPD data from the United States, the Fed’s preferred gauge of inflation, namely the Personal Consumer Expenditure Index in addition to the GPD data from Canada.