– This is the script of CNBC's news report for China's CCTV on February 4, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Oil prices jumped 8 percent higher on Wednesday, snapping a two-day rout, after investors took advantage of a weaker U.S. dollar and shrugged off data showing an unexpected large surge in U.S. crude inventories to record highs.
New York Fed President Bill Dudley said Wednesday that Financial conditions have tightened since the Fed raised interest rates in December.
He also reportedly warned that additional strength of the U.S. dollar could have "significant consequences" for the U.S. economy.
The statement spurred the dollar index to tumble to an over seven-week low, making commodities priced in the greenback cheaper for holders of other currencies, amid growing skepticism that the Federal Reserve would be able to hike U.S. interest rates again this year and after data showed the U.S. services industry grew more slowly than expected last month.
On the trading front, investors have borrowed cheaper dollar to buy in oil.
In the last year, speculators had racked up the largest short, or bearish, position in crude oil in history and part of the current volatility in the price has come as a result of some of those positions being closed.
The markets shrugged off government data showing U.S. crude and gasoline inventories rose to record levels last week. Crude soared 7.8 million barrels higher, topping analysts' expectations for a rise of 4.8 million barrels, as imports jumped and refiners trimmed throughput.
Comments by Russia's foreign minister reiterating the major producer's willingness to meet if there was consensus among the OPEC and non-OPEC members, also reignited hopes of a deal to trim output and helped to boost prices.
CNBC's Qian Chen, reporting from Singapore.
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Welcome to CNBC Business Daily, I'm Qian Chen.
Gold stayed near a three-month top on Thursday after marking its best day in two weeks, buoyed by expectations that global economic and financial headwinds could make it tough for the U.S. Federal Reserve to raise interest rates in the near term.
Gold has benefited from the uncertainty on the timing of the next U.S. rate hike, burnishing its safe-haven draw that has been on full display since the year began as investors shunned risky assets.
Barclays Head of Asia FX and Rates Strategy
There's a confluence of events now for markets, even if you see a bit of risk rally, theres always something negative out there. You know, whether its oil renewing its weakness, or else like China concerns, whether weak growth numbers elsewhere, or panic in other countries, there are so many factors out there at the moment, pushing the highlighting the volatility and risk aversions.
Can the rally last?
It is typically argued that rising inflation is necessary for gold prices to rise. The general idea is that gold is priced in U.S. dollars, and as each dollar becomes less valuable, it takes less of them to buy the same amount of gold. It is along these lines that gold's dramatic drop over the past few years have been pinned on ultra-low inflation and a strengthening U.S. dollar, particularly after much gold was bought amid the belief that inflation was set to soar as the dollar collapsed.
The idea that inflation is a necessary condition for higher gold prices may explain why gold sellers like Peter Schiff continue to make Rube-Goldberg-ian arguments for why inflation will rise.
The basic idea is that gold and cash compete for a similar pool of investors' money. If the central banks implicitly or explicitly causes cash to yield negative returns, then gold will look better in comparison.
Now, if we take a look from the technical perspective...
Gold pushed above a key technical barrier Wednesday indicating that the market might have room to move higher.
The yellow metal propelled above the 200-day moving average, marking the first time this technical barrier has been broken since October.
Investor focus will soon turn to Friday's nonfarm payrolls and BOE decisions.
CNBC's Qian Chen, reporting from Singapore.
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