- Oil Demand Concerns
- Safe-Haven Demand
- U.S China Tensions
Oil edged lower on growing concerns about demand recovery amid a spike in coronavirus cases in the U.S, the world’s largest consumer of the black gold. Gold (XAUUSD), on the other hand, was flat struggling for direction near eight-year highs.
U.S West Texas Intermediate oil was down by 0.4% to $40.46. Brent Crude, on the other hand, fell 0.4% to $42.91 a barrel.
Time : 07-07-2020
Pivot : $40.56
Technical View : Short Below $40.36
Targets : $40.16 – $39.92 – $39.61 – $39.11
Comments : Weak Bearish
Last Price : $40.06
A Plunge in oil prices comes at the backdrop of 16 U.S states reporting a record number of new coronavirus cases. Florida has already imposed limits on economic reopening with California and Texas, also imposing restrictions on movement.
The likelihood of demand picking pace to support prices above the $40 a barrel level looks unlikely seen as one of the reasons why prices are edging lower. Oil prices continue to edge lower despite U.S output falling to 10.5 million barrels a day, down from record highs of 13 million a day in March.
With demand unlikely to pick pace anytime soon, investors expect a plunge in new drilling activity in the U.S as it is no longer viable. Amid the gloomy outlook, analysts at Citi expect oil prices to recover in the third and fourth quarters. According to the analysts, oil prices should average between $37 and $39 in the third quarter and surge to between $45 and $48 in the fourth quarter.
Gold Bullish Tone
Gold, on the other hand, is struggling for direction after a recent spike to eight-year highs. A spike in coronavirus has continued to fuel demand for safe-haven sending gold spot prices higher.
Time : 07-07-2020
Pivot : $1781.06
Technical View : Long Above $1785.91
Target : $1790.76 – $1796.81 – $1806.41
Comments : Weak Bullish to Neutral
Last Price : 1775.89
Technical View : Short below $1777.84
Target : $1774.63 – $1765.05 – $1758.91
A spike in risk sentiment is another development that has continued to offer support to gold prices. Reports that President Donald Trump is considering several executive orders targeting China, given its handling of the Phase 1 trade deal should continue to fuel risk sentiment in the market.
Likewise, Beijing and Washington are engaged in a fierce standoff over Hong Kong that affirms that risk aversion conversely demands safe havens such as gold.