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Currently, affected by the continuous deterioration of the European and American debt crisis, the European and American bond markets have plummeted, the foreign exchange market has experienced significant fluctuations, and gold prices have continued to reach new highs. Furthermore, with the interference of the rating agency Standard & Poor's, the global economy is at a new critical juncture. Although the G7 issued a joint statement during the early Asian session, it is expected that global stock markets will continue to experience severe declines this week. On the other hand, the European sovereign bond crisis may further deteriorate. In the uncertain environment of the global economy, a new round of financial tsunami may be approaching. In the short term, risk-averse sentiment is expected to dominate the market. Accompanying these upheavals, the global economy might experience a second bottom.
International crude oil prices have fallen sharply due to the impact of the European and American debt crisis and concerns about the U.S. economy. According to the latest data, the price of crude oil futures on the New York Mercantile Exchange (NYMEX) fell by around $4 in the Asian electronic trading session on the 9th, having once dipped below $77 per barrel. The September Brent crude oil futures contract on ICE fell by more than $3.5, breaking below $100 per barrel, reaching a six-month low. Since August 5, when Standard & Poor's downgraded the U.S. credit rating from AAA to AA+ and set its credit outlook as negative, S&P indicated that the U.S. political system has become unstable and the size of the deficit reduction agreement reached in the week ending August 5 was not large enough. Additionally, Moody's also warned that if the U.S. does not continue to cut deficits, Moody's would also downgrade the U.S. credit rating. These are all direct factors contributing to the sharp fall in crude oil prices.
According to analyst Eugen Weinberg of Commerzbank, the downgrade of the U.S. rating has pushed down both stock markets and crude oil. Unless the government takes action to increase liquidity, such as implementing a new round of quantitative easing monetary policy, this trend could continue. Meanwhile, Goldman Sachs maintained its forecast for the average crude oil price in 2012 at $130 per barrel unchanged.
In summary, an important factor that triggered the global stock market plunge yesterday was the downgrade of the U.S. credit rating. This indicates that the adverse effects of excessive credit expansion over the past decade have begun to show signs. The prospects for the world economy are exceptionally grim. If not properly resolved, the global economy may face the fate of a second recession. Moreover, with the continued deterioration of the European and American debt crisis, it will be difficult for crude oil trends to reverse their declining situation in a considerable period.
This makes the trend of gold futures and international crude oil prices even more subtle, with crude oil potentially continuing its downward momentum.
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