Oil ticks upwards, gold edges lower

Oil treads water

Oil prices rose slightly overnight as Middle East concerns underpinned prices. Brent crude finished just 0.20% higher at USD63.10 a barrel, while WTI crept 0.45% higher to USD59.65 a barrel. Although the closes were neutral, both contracts traded in busy two-dollar ranges, hinting that interest remains high, even if directional momentum does not.

In Asia, oil has moved higher again, with Brent crude climbing 0.65% to USD63.55 and WTI rising 0.50% to USD59.95 a barrel. China’s import data will have provided some tailwinds, with crude imports increasing healthily. Fears of Iranian retaliation for the unspecified attack on its nuclear processing facility is likely to underpin prices this week. US/Iran talks resume in Vienna today, with markets discounting any hope of progress. That could provide a surprise reason to sell oil if, by some miracle, the two sides find common ground.

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 ranges will signal oil’s next directional move.

Gold eases on fading short-term momentum

Having been led to water so often by gold’s promised nirvana, only to find the watering hole contaminated, it is clear that long-suffering bullish gold investors have no appetite to wear any pain on recent long positions. With momentum fading as the US 10-year yield remained unchanged again, long-covering set in and gold faded by 0.60% to USD1733.00 an ounce. Asian trading is even more subdued, gold edging lower USD1732.00 an ounce in directionless trade.

In all likelihood, gold will now settle into a USD1720.00 to USD1750.00 range, awaiting its next directional input, having traced out a double top at the 50.0% retracement this week. Everything now rests with this evening’s US inflation data and whether a surprise deviation causes a move in the US yield curve, one way or the other. The risks are to the upside with inflation, and thus gold probably faces more headwinds in the coming sessions this week.

Only a close below support at USD1700.00 an ounce threatens the premise that gold has traced out a longer-term structural low.

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