China Data Lifts Oil, Gold Buoyed By Softer USD

Oil rises on promising Chinese data

Oil prices are rising on Monday, up more than 1% early in the European session.

The Chinese PMI data overnight is giving crude prices a nice lift, with the services PMI in particular offering encouraging signs. China is living a very different reality to the rest of us and that is evident in the data, with the services PMI rising to 55.2 but the manufacturing reading slipping to 51.

Domestic demand is keeping things ticking over nicely while the rest of the world contends with gradual reopenings – and setbacks that come with it – and travel restrictions. Brent and WTI are pushing their 200 day simple moving averages at the moment as the gradual price recovery continues.  A close above here on a weekly basis could make things interesting.

Gold steady as USD tests its lows

Gold is a little flat today after bouncing strongly in Friday’s session as the dollar sunk back to its August low.

The promise of low rates for a very long time not only gets equity investors excited, bond investors quite enjoy those soothing tones as well. Yields on the 10-year remain a little off their lows but with inflation expectations now rising, real yields fell back below -1% on Friday and took the dollar down with them.

This remains a very nice environment for gold, although it continues to look jittery in the short term. August was a wake-up call for gold traders, markets don’t move in straight lines. A move back above $2,000 should get them back on board though.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.