Oil stays steady, gold climbs on US yields

Oil prices remain steady

Oil had another sideways day in a narrow range overnight, with the opposing forces of higher production versus a weaker US dollar seemingly balancing each other out for now. Brent crude rose 0.67% to USD63.30 a barrel, and WTI rose 0.40% to USD59.75 a barrel. Both contracts have eased by 20 cents a barrel in Asia in directionless trading.

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.

In the bigger picture, Brent crude continues to trade noisily between USD60.00 and USD65.00 a barrel, and WTI’s between USD57.50 and USD62.50 a barrel. Intraday sentiment and flows continue to dominate proceedings. A breakout of those wider ranges will signal oil’s next directional move.

Gold roars higher on lower US yields

Gold markets powered higher overnight after a dovish Jerome Powell and poor US Initial Jobless Claims sent both US yields and the US dollar lower. Fed Chairman Jerome Powell stayed solidly on message overnight, emphasising once again the Fed’s priority in assisting the US employment recovery while dismissing inflation concerns as transitory.

Gold rose 1.05% to USD1755.50 an ounce, although it has retreated modestly to USD1753.50 an ounce in Asia on profit-taking flows.

Gold is now poised to test its 50.0% Fibonacci at USD1760.00 an ounce, which is also a multi-week pivot point. A daily close above that level tonight signals that the 50.0/61.80% Fibonacci retracement box has held and that a longer-term low in gold prices is now in place. All things being equal, that should signal further gains above USD1800.00 an ounce next week.

Gold has initial support at USD1733.00 an ounce, followed by USD1720.00 an ounce. Resistance is nearby at USD1760.00 an ounce, followed by USD1780.00 and USD1800.00 an ounce.

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