Oil Creeps Higher Overnight But Remains Mid-Range
The impressive U.S. labour data lifted Brent crude and WTI higher overnight, although only into the upper side of their respective one-month ranges. Like currency markets, nagging doubts remain about the U.S. economy, with the employment data collected before the spiralling COVID-19 cases in the U.S. Sunbelt.
Brent crude rose 1.85% to USD $42.90 a barrel, with monthly resistance at USD $44.00 a barrel, and monthly support around USD $40.00 a barrel. WTI rose 1.55% to USD $40.40 a barrel. It has resistance at USD $41.60 a barrel, and support at USD $37.00 a barrel in the greater picture. Oil is unchanged in Asian trading as markets content themselves to sit out the U.S. holiday.
Both Brent crude and WTI have quietly ground higher this week, supported by improving economic data from around the world. Lingering COVID-19 and geopolitical concerns, however, are tempering the momentum required to challenge their monthly highs for now. Oil should remain supported this afternoon on the expected positive monthly services PMI’s to be released across Europe today.
Gold Finds Eager Buyers On Dips Overnight
Gold once again probed support at USD $1,760.00 an ounce overnight, and once again rallied strongly of that level. It raced higher from the lows, to close at USD $1,776.00 an ounce. That was despite the impressive U.S. employment data adding to the global recovery narrative. The hike in U.S. treasury yields after the nonfarms quickly ran out of steam, and partially supported gold.
Nagging doubts appear to remain in investors’ minds though, about the explosion of COVID-19 cases in the U.S. Sunbelt states and its possible negative effect on the recovery going forward.
Geopolitical considerations are also to the fore, with the U.S. Congress passing its China sanctions bill. China also threatened the U.S., Britain and Australia with unspecified retaliation over their HK security bill stance. With a holiday in the U.S. and the weekend upon us, some haven-directed buying of gold is evident.
The price action in gold has been surprisingly constructive to me. Support is at USD $1760.00 an ounce with resistance is at USD $1790.00 an ounce. I expect those levels to contain gold into the week’s end. Only a fall through USD $1745.00 an ounce invalidates the bullish outlook. Although the gold price action is positive, it still lacks the momentum to mount a serious challenge on USD $1800.00 an ounce.
Gold is unchanged in moribund Asian trading and the lack of activity has continued in European trade.
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