Oil slumps, gold in ‘no man’s land’

US Data

A wrath of late-morning data confirmed what everyone knows, the US economy is headed in the right direction.  The miss with February’s factory and durable goods orders did not matter following the March ISM services index record growth reading.  The service sector is bouncing back stronger than expected and that is great news for the US economy.  The ISM Services index rose to 63.7, a strong beat of the 59.0 forecast, and an improvement from February’s nine-month low of 55.3.

Oil

Oil prices are lower as the global crude demand outlook remains unbalanced and as OPEC+ prepares to ramp up production.  It is hard to gauge the demand outlook since you have Europe still struggling with their vaccine distribution, while India and Brazil still have COVID cases trending higher.  The US looks like it’s ready to party like it’s 2019, but that won’t be enough to send oil prices much higher from current levels.  The rest of the world seems to still be putting restrictions on people moving and until that changes, crude prices will struggle.

Gold

Gold prices are in ‘no man’s land’ as investors await to see if the bond market selloff returns and sends the dollar higher.  This is a tough Monday for gold trading as Europe remains on holiday and Treasury yields look stable.  The aftermath of the robust nonfarm payroll report is dampening demand for safe-havens but could be raising some eyebrows about future inflation down the road.  Gold’s bottom appears to be in place but that will only be confirmed once everyone returns from holiday tomorrow.

Gold prices turned positive after a record ISM Service index reading showed prices paid for materials surged to the highest since July 2008.  Traders will keep a close eye on Wednesday’s Fed Minutes that could show if they were thinking about rolling back aid.

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