Fundamentals still bullish for oil
It would appear the oil rally is finally running on fumes, with Brent and WTI both off a little shy of 1% today. It’s been an incredible run for crude prices and a little heat coming out of the rally is probably healthy. We may not see too large a correction though before interest picks up once more.
A move below USD 83.60 in Brent could see a price pullback towards the USD 80-81 region, with the former being the neckline of a double top that’s been forming over the last week. While this would be a healthy move, I’m not convinced it marks the end of the rally in oil prices, with the fundamentals remaining bullish which could ensure pullbacks are shallow.
We saw how traders reacted to Wednesday’s EIA report despite crude prices trading down on the day at the time. There’s clearly still plenty of support in the market and I expect that to continue unless something fundamentally changes in the interim.
Gold edges higher as dollar nears key support
It’s been a choppy session for gold prices, which have been supported over the last week by softness in the dollar even as yields have risen and risk appetite remained strong. The yellow metal has been gradually trending higher over the last few weeks but is already seeing some resistance around USD 1,800.
Its relationship with the dollar remains strong, even if its other traditional correlations are less clear in this unusual environment, so a move above this resistance level will require a significant breakout lower in the dollar index, below support around 93.
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