Oil and gold show modest gains

Oil drifts higher on positive data

Oil prices drifted higher overnight on positive PMI data but remain becalmed at the higher end of their one-month ranges. Italian, French, German and United Kingdom manufacturing PMI’s all climbed further into expansionary territory. But it was the US PMI’s that draw a collective sigh of relief from financial markets. Both the Markit and ISM Manufacturing PMI’s for July outperforming at 50.9 and 54.2, respectively. Brent crude rose 0.50% to USD43.85 a barrel, and WTI rose 0.80% to USD40.80 a barrel. In Asia today, both contracts remain almost unchanged.

Positive data indicating the tentative global recovery remains on track and falling US production continues to support prices on dips. However, a stronger US dollar and nagging Covid-19 doubts have yet to dissipate concerns enough to propel oil prices higher.

Until the balance of those factors is changed materially, oil prices will continue to range-trade and enjoy their summer holidays.

Gold consolidates recent gains

Gold climbed modestly to trace out a new record high at USD1987.00 an ounce overnight, before edging lower to finish the session unchanged at USD1978.00 an ounce. The intra-day dip to USD1960.00 an ounce was keenly sought, with gold content to consolidate its recent gains as it awaits events to spur price action from elsewhere. Buyers too, seem more than content to wait for dips to add to longs, rather than chase markets higher.

Although the case for higher gold prices is compelling, patience is likely to be the order of the day until the US Non-Farm Payrolls on Friday. Gold could yet inflict a downward correction on recent long positioning but needs to break support at USD1960.00 and USD1940.00 an ounce to do so. Resistance rests at the overnight high at USD1987.00 an ounce, followed by the USD2000.00 an ounce region.

Both gold and silver are unchanged in Asia, and a quiet session beckons for the rest of the day.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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