Oil pares losses, gold seesaws

Crude prices pared losses over escalating tensions after reportedly Iranian-backed forces seized a tanker in the Middle East.  The UK Maritime Trader Operations believes the incident was a potential hijacking. On the eve of when Iran’s new hardline president takes office, these developments may complicate nuclear deal negotiations.  If Iran’s sanction relief expectations continue to get pushed back, it looks like the current delta variant concerns to the short-term outlook may not have much more downside impact with oil prices.

WTI crude is trying to hold onto the USD 70 level, but to do so US oil inventories need to continue to decline.  If US stockpiles unexpectedly increase this week, WTI crude could be vulnerable to a drop towards the USD 67.00 region.

Gold eyes US NFP report

Gold prices continue to seesaw ahead of Friday’s nonfarm payroll report.  Delta variant concerns and falling global bond yields should help push gold higher, but right now Wall Street refuses to make any big bets until some clarity is made over how strong is the labor market recovery.  Gold’s fate will likely follow tapering bets, with an end-of-year taper announcement being most supportive for gold prices.

If the labor market recovery continues at its pace of several hundred thousand, the Fed won’t hit their substantial progress goal until the end of the year, which would mean gold could break out higher.  The near-term outlook is still bullish for bullion, but two robust nonfarm payroll reports could put a wrench in that theory.  If gold can finish above USD 1,850 after the nonfarm payroll volatility subsides, gold could be poised to make a run towards the USD 1,900 level.

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