Home Gold News Oil Tanks on Demand Concerns as Gold (XAUUSD) Rallies On Risk Sentiments

Oil Tanks on Demand Concerns as Gold (XAUUSD) Rallies On Risk Sentiments

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  • Coronavirus Concerns
  • Oil Demand Fears
  • Goldman Sachs Oil Forecast

Oil remained under pressure, Friday morning, as a spike in COVID-19 cases stocked fears of demand recovery. Gold (XAUUSD), on the other hand, remained bullish after a recent pullback from nine-year highs attributed to profit taken.

Oil under Pressure

Brent Crude was down 0.3% to $42.13 a barrel while West Texas intermediate Crude was down 0.2% to $ 40.05 a barrel. Oil prices are struggling to hold on above the $40 a barrel level as a spike in coronavirus cases in the world’s largest consumer of oil continues to dent the outlook.

Time                            : 07-03-2020

Pivot                           : $40.21

Technical View           : Long Above $40.41

Targets                        : $40.61 – $40.97 – $41.38 – $42.01

Comments                  : Neutral

Last Price                    : $39.94

Technical View           : Short below $40.01

Targets                        : $39.81 – 39.54 – 39.02 – 38.51

Increases in daily coronavirus cases in the United States could continue to arouse fears in the oil markets, given its potential impact on demand. With daily cases rallying to highs of 50,000, there is already a concern of widespread lockdowns to curb the further spread. Lockdowns is the last thing that oil markets need at a time when demand is near record lows.

In a research note to investors, Goldman Sachs has warned that global oil demand is at risk of contracting by a further 8% in 2020 as the COVID-109 pandemic continues to cause havoc. However, the analysts expect demand to rebound in 2021 by 6%, dependent on the COVID-19 epidemic subsiding.

Gold Bullish

Gold, on the other hand, remains bullish despite edging lower by close to 10% from nine-year highs. A spike in risk sentiment in the market continues to fuel demand for the precious metal as a safe-haven.

While the yellow metal has pulled lower in recent days, its losses are curbed by the ever-increasing COVID-19 around the world.

Time                            : 07-03-2020

Pivot                           : $1770.71

Technical View           : Long Above $1777.52

Targets                        : $1784.34 – $1792.88 – $1806.22

Comments                  : Neutral

Last Price                    : 1774.89

Technical View           : Short below $1766.36

Target                         : $1762.02 – $1748.82 – $1740.18

While global cases have already clocked highs of 10 million, fears of the economic recession continue to surge, fueling demand for safe havens such as gold.

Gold also looks set to continue edging higher amidst growing tensions between the U.S and China over the security law in Hong Kong.

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