Oil sinks on report of progress in nuclear talks
The rally in oil prices ran out of gas as energy traders had to refrain from crude demand optimism until the bulk of restrictive measures in Asia is known. The more infectious Indian variant has been a strong cap for oil prices this month.
Crude prices plunged after the BBC reported an important announcement with the Iran nuclear deal will be made tomorrow. If Iran quickly gets to nuclear compliance, the energy markets could see more supply hit by the middle of summer.
Brent pared losses after Russian Envoy Ulyanov noted that unresolved issues remain with the Iran Nuclear Deal and that it is premature to have a breakthrough.
The crude demand recovery story during the second half of the year still supports much higher oil prices by the end of the year, with this Iran news possibly shaving a couple of dollars off most analysts’ end-of-year targets.
Gold prices are steadying as Treasury yields may have found a short-term bottom. Gold’s three-day rally was poised to hit some resistance on bullish exhaustion following the break of both the 200-day SMA and the downward sloping trendline from the record high price set last summer.
Gold’s outlook still screams bullishness given the monetary policy stances across the world’s two largest economies. Gold has been a terrible inflation hedge over the past 12 months, but that could change given the weaker dollar dynamics that are unfolding alongside a commodity boom. Gold’s eyes are set for the USD1,900 level, with bullion investors likely poised to defend any weakness that approaches the USD1850 level.
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