Oil steady ahead of data releases
Oil prices are relatively steady on Wednesday after a rocky couple of days. Crude prices came close to their recent peak but PMI data on Monday pulled the rug from underneath the rally and saw prices tumble over the first couple of sessions of the week. This isn’t anything major to worry about and was at least partially a reflection of the short-term overextended nature of prices going into the week.
WTI slipped below USD 70 but recovered to sit a little above here going into a batch of economic reports today. The small draw reported by API on Tuesday had little impact, with the EIA the more closely followed release. That follows a few other data points though, with the ADP employment and two services PMIs potentially being the catalyst for the next move in oil prices.
Strong reports from the US could propel WTI higher once more. Although there’s some way to go to make up the lost ground this week, not to mention the early July peak when prices hit their highest level since 2014. I expect prices will remain well supported in the coming weeks as the recovery continues but the pattern of lower momentum may continue.
Should gold bulls be worried?
Gold is seeing more consolidation despite US yields remaining very low. This may just be caution ahead of Friday’s jobs data and the technical setup continues to look bullish. But gold struggling to break higher while yields sit around their lowest levels since earlier this year may be a concern.
Of course, a softer jobs report could see yields sink further and be the catalyst for the bullish breakout above USD 1,833, with the next big level being USD 1,850. A move below USD 1,790 on the other hand would be a worrying development and could see the yellow metal eyeing the June lows around USD 1,750 as investors weigh up the prospect of a September taper announcement.
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