Oil takes breather, gold falls

Oil pauses for breath after Thursday’s jump

After some descent swings across the week, oil is heading into the weekend on a calmer note. Oil prices surged 2.4% on Thursday, boosted by President Biden signing off on the largest fiscal stimulus package in US history and his promise to vaccinate all American adults by 1^st May. Expectations for future demand have risen sharply in line with what is now expected to be a faster US economic recovery. The fact that the US driving season could be back on is an added bonus.

In the monthly oil market report OPEC revised lower its estimates for oil in the first half of the year, which, with hindsight makes the OPEC+ group’s decision last week less surprising. The cartel also upwardly revised its demand estimates for H2, turning more bullish in the second half of the year.

Technically US crude oil could be poised for further gains should it manage a meaningful move above resistance at USD65.80, which could bring USD67.87 into target.

Yields rise, gold falls

Gold is sliding lower, snapping a three-day winning streak and testing support at USD1700. Yesterday’s relief in the fixed income market proved to be short-lived and a fresh leg up in yields today has lifted the greenback, putting pressure on non-yielding, dollar-denominated gold.

Whilst bond yields are testing investors’ nerves any selloff could be capped by the deteriorating mood in the market.

Attention will now turn to US producer prices along with the preliminary estimate of the US Michigan Consumer Sentiment Index for fresh impetus.

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