Crude prices tumbled after the UK reported over 11,000 new COVID cases, the most since mid-February. The crude demand recovery playbook has not been recently threatened at all, but this UK surge in COVID cases despite rapid vaccinations will raise many alarms over how quickly the rest of Europe will reopen.
Brent crude could be ripe for further profit-taking if more optimistic comments come from the latest round of Iran nuclear deal talks. Brent crude might not find much support at the USD70 level, but a major pullback seems unlikely.
Gold did not do a good job of defending the USD1,800 level and now momentum selling has taken prices 38% below the USD1,919.20 high made at the beginning of the month. Gold’s overflowing stimulus trade was ended yesterday by the Fed’s dot plots. The taper tantrum trade is hitting gold the hardest right now and could last a couple more sessions.
Gold did see a little bounce after a surprise increase with jobless claims but that quickly faded. Gold looks like a falling knife but eventually the longer-term prospects will attract buyers. Long-term bets on gold could start to emerge closer to the USD1750 level, but some might wait and see if one last thrust lower eyes the USDcurde1,675 level.
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