Oil gains ground on positive vaccine news
Crude prices rose after Dr. Anthony Fauci, the nation’s top infectious disease expert, noted that both the Pfizer and AstraZeneca COVID vaccines are effective against the Delta variant post two doses. While the US and large parts of Europe are in a robust crude demand recovery, a lot of the world is still struggling with COVID-19. Emerging markets are getting their hands on more vaccines and that is very positive for oil prices. Brazil’s health minister noted they have enough COVID vaccine doses.
The US lifted a travel advisory for Singapore to normal precautions, a steady sign that international air travel should improve dramatically in the coming months.
Also providing some support for oil prices was reports that Iran’s next president, most likely a hardliner, won’t derail the Iran nuclear deal talks. It seems the talks to reach an agreement could drag on much longer which means the timeline for additional output from Iran keeps getting pushed back.
Oil remains the easiest trade in the commodity space given the wait-and-see approach with the upcoming US inflation report on Thursday.
Gold won’t do much of anything until financial markets get a better handle over pricing pressures. Gold will likely dance around the USD1,900 level until investors figure out if the latest CPI report forces more Fed members to embrace the idea of talking about tapering.
Until Thursday’s main economic data release, gold will likely follow the move in Treasuries. The technicals are supporting a bounce for Treasury yields, so gold might remain soft.
Gold’s medium-and -long-term outlooks both remain bullish as it will take at the very least a few more hotter-than-expected inflation reports to move the Fed’s undisclosed timeline over tapering. The transitory thesis still remains intact and this upcoming inflation report shouldn’t change anything.
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.