Oil prices have bounced back strongly after a rocky start to the week. OPEC+ struck a deal to slowly ramp up production each month by 400,000 with a view to erase all cuts by the end of next year.
The week got off to a rocky start following a surge in Covid cases that led to questions about the strength of the recovery in the near term. That was quickly replaced by optimism on the back of a number of strong earnings reports and risk appetite has been strong since.
WTI climbed quickly back above USD 70 and has held above here, with sights set back on this month’s highs around USD 76. While earnings have given cause for optimism, Covid cases are likely to continue to surge which may test the nerves of investors over the coming weeks.
Gold has entered into a consolidation period around USD 1,800 where it has been trading for most of the week. The yellow metal enjoyed a strong start to July but has struggled to maintain it over the last week as risk appetite has improved and US yields have crept higher.
It has shown some resilience around these levels though so it would appear gold remains in favour. And with central banks in no rush to start paring back their support, it’s easy to understand why. A significant move back below USD 1,800 may open up a move back towards USD 1,750-1,760. Resistance above comes around USD 1,840, with USD 1,860 the next level of interest.
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