Oil drops 5% across the week
Oil prices are edging higher on Friday, picking up from a monthly low after a steep sell-off across the week. Both oil contracts are down around 5% this week as investors brace themselves for the return of Iranian oil to the market.
Signs of significant progress in talks to revive the Iran nuclear deal of 2015 means that the US-imposed sanctions on Iran’s oil banking and shipping sectors could be lifted. One million barrels per day of Iranian oil could hit the market, potentially in the second half of this year.
The demand side of the equation remains mixed with optimism surrounding the prospect of fuel demand recovery in the West, which is being offset by rising Covid cases in Asia.
Technically, the picture for oil is bearish after the price closed below its multi-month ascending trendline and 50-day moving average. Sellers could look to target USD60.00, the key psychological level.
Gold set for third week of gains
Gold bulls are pausing for breath after a six-session winning run. The precious metal is edging a few ticks lower today. However, it is on track to book weekly gains of around 1.8%, marking its third consecutive winning week.
Easing US treasury yields and a softer tone surrounding the US dollar has boosted the price of gold. Concerns over the Fed readying to discuss a move towards tightening monetary policy have eased, and as the effect of the FOMC minutes faded, the yellow metal climbed higher. The bottom line is that any rise in US interest rates is still a long way off. The low-interest-rate environment is set to stay for some time yet, which is supportive of non-yielding gold.
Looking ahead, US manufacturing and service sector PMIs will be closely watched for clues over the health of the US economy and its impact on the US dollar.
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.
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