Oil drifts, gold edges lower on US yields

Oil trades sideways

With no real fireworks from the FOMC minutes and no new emerging drivers for prices, oil markets contented themselves to trade sideways overnight, with the rise in US gasoline inventories acting a modest brake on price rises. Brent crude edged 0.35% higher to USD62.90 overnight with WTI climbing 0.65% to USD59.50 a barrel.

Both contracts have added 20 cents in Asia as oil markets continue to monitor developments in the US/Iran talks in Vienna. Although the chances of a breakthrough are low, any signs that one may occur is likely to send oil lower in the short term.

Brent crude’s critical levels at USD60.00 and USD65.00 a barrel. WTI’s are USD57.50 and USD62.50 a barrel. Intraday sentiment and flows continue to dominate proceedings.

Gold edges lower on US yield rise

Gold prices remain connected at the hip to movements in the US 10-year bond yields. Overnight, US 10-years rose slightly which pushed gold 0.33% lower to USD1737.70 an ounce, with gold rising slightly to USD1738.70 an ounce in a moribund Asian session.

Although the rally has halted temporarily at the USD1745.00 an ounce resistance level, gold’s overall performance remains impressive, notably because it has formed a series of daily lows at the 61.80% Fibonacci leave near USD1685.00 an ounce. That keeps the premise that gold is creating a longer-term base firmly in place, and a rise through the 50.0% Fibonacci at USD1760.00 an ounce will confirm the technical picture.

Gold’s true test will come if US yields stage another sharp rise. If gold hangs on to its gains in that scenario, my confidence will rise even further.

In the near term, gold has support at USD1727.00 and USD1720.00 an ounce, followed by USD1705.00 an ounce. Gold has resistance at USD1745.50 and USD1755.00 an ounce, followed by the previously mentioned USD1760.00 an ounce area.

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