Saudi Arabia and Russia agreeing to freeze output has not had the effect on oil prices that both nations likely wanted. Goldman Sachs also thinks gold is overpriced and won’t reach much higher.
Oil Prices Still Fall
Brent crude oil fell 3% yesterday, erasing early gains after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output if other big exporters joined them.
Benchmark Brent prices jumped briefly to $35 a barrel after Russia and Saudi Arabia agreed to keep output at January levels, in what could be the first joint OPEC and non-OPEC deal in 15 years.
Qatari energy minister Mohammad bin Saleh al-Sada said the step would help to stabilize the oil market, which has experienced price declines not seen since the early 2000s because of a supply glut.
But buying quickly ran out of steam as investors weighed the chances of the agreement being sealed, with Iran absent from the talks and determined to raise production.
Goldman Sachs Recommends Shorting Gold
Investors should short gold, one of the best performing assets this year, Goldman Sachs said, as it believes a recent rally triggered by concerns over the health of the global economy has been overdone.
Bullion has gained about 13% in 2016 as worries over negative interest rates and their impact on the banking sector sent investors scurrying out of equities and into gold as a safe haven.