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Oil Prices Drop As The Second Wave Weighs On Demand Recovery While Gold Firms At $1,800

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  • Oil prices drop
  • Gold firms above $1800
  • Gold to test $2,000 level in six months

Oil prices fell on Monday as the second wave of COVID-19 infections continues to weigh on the prospect of oil demand recovery.

Time                            : 07-20-2020

Pivot                           : $40.56

Technical View           : Short Below $40.36

Targets                        : $40.16 – $40.07 – $39.82

Comments                  : Weak bearish

Last Price                    : $40.17

The resurgence of COVID-19 infections derailing oil demand

Although oil demand has recovered from the 30% drop in April following strict COVID-19 restrictions, consumption is still below pre-pandemic levels. With the rise in second wave infections in the US, retail fuel demand has also been dipping. According to data released last week, oil and natural gas drillers in the US have reduced the number of operating rigs for the 11th successive week.

AxiCorp’s chief global markets strategist Stephen Innes indicated that with the rise in the number of daily cases in the US, states are showing little success in easing restrictions and flattening the curve. Innes indicates that there are concerns regarding the post-pandemic recovery rate that are limiting the oil prices upside.

Although Russia has not finalized its oil export plans, Urals crude shipments are likely to be in line with this month’s levels.

Gold could hit $2,000 in the next six months

On Monday, Gold firmed above the $1,800 psychological levels as rising cases of COVID-19 globally, and a weaker dollar underpinned the yellow metal.

Time                            : 07-20-2020

Pivot                           : $1,807.85

Technical View           : Long above $1,809.25

Targets                        : $1,810.56 – $1,813.12 – $1,815.52

Comments                  : Weak bullish

Last Price                    : $1,808.40

According to Citibank, gold will set a record high in the next six to nine months. There is a 30% chance that gold prices will go above $2,000 in the next five months. Citibank cites loose monetary policy, record ETF inflows, low yields, and enhanced gold asset allocation as the triggers. Already nominal gold prices have set fresh records in most currencies this year, therefore it is a matter of time before gold hits the new highs.

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