Oil:
Oil closed yesterday’s just above $96 a barrel after a very volatile trading session. The market contributions to oil demand are limited in comparison with the effects of tensions from Iran and the surge in the price of corn.
Commodities traders pushed oil down yesterday after mixed results from US financial statements. Inflation seems to be a better instigator for the rise of gold than for future oil demands.
The weaker dollar, which currently has just a small contribution to the appreciation of oil, is also under great pressure and has not been able to bring the price of oil to challenge the resistance of $100 a barrel.
Trading in a range of $96 and $98 a barrel, oil is awaiting either a concrete robust monetary plan or accelerated tension from the Middle East, before it can escape its current range. Speculation for economic easing or higher demand for oil from positive economic results will not alone be enough to challenge its popular $100 a barrel resistance level.
Gold:
Gold closed yesterday above $1670 an ounce and has a strong resistance level at $1678 after it broke the last high seen at the start of May.
Any break beyond $1678 an ounce will have to come from higher inflation expectations arising from more ease to the economy from the FED, ECB and China.
Easing from either one of these could create a dominos effect and push money supply even higher, thus breaking gold’s next resistance of $1700 an ounce.
Global ease action still has not gone the whole nine yards. However, after the Fed’s last dovish minutes, any expected economic results from the US, or worse figures, will instigate the FED to more action.
Even mixed results yesterday, showing good residential figures amid an increase in jobless claims, have surged the price of the commodity with bullish traders setting the tone.
We should expect levels to continue at this range of $1668 to $1675 until further expectations arise.