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Oil Tanks On Production Cuts Concerns Amidst Gold (XAU/USD) Sell-off And Silver (XAG/USD) Rally

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  • Oil Production Cuts Concerns
  • Gold Sell-Off
  • Renewed Silver Demand

Oil prices gave back some of the gains accrued in early Wednesday trading session as production cut concerns rocked the market. Gold (XAU/USD), on the other hand, tumbled by more than 1.9% as Silver (XAG/USD) raced higher, closing in on a key psychological level.

Oil Price Dip

After it appeared oil prices were closing in on the elusive $40 a barrel level, renewed sell-off rocked the oil markets as oil majors continued to battle each other overextension of production cuts. Brent Crude fell by as much as 1% in early Thursday trading session to $39.38 a barrel. U.S West Texas was also down by 1.6% or 61 cents to $36.68 a barrel.

Oil Tanks On Production Cuts

Time                            : 04-06-2020

Pivot                           : $36.84

Technical View           : Long Above $37.04

Target                         : $37.24 next 2 targets are $37.96 and $39.17

Comments                  : Sideways

Last Price                    : $36.49

Technical View           : Short below $36.64

Target                         : $36.44 next 3 targets are $35.86, $35.38 and $34.51

Oil prices had initially spiked higher after Saudi Arabia, and Russia agreed to extend the 9.7 million barrel a day cut into July. However, failure to agree on a proposed June 9 OPEC meeting raised concerns as to whether oil producers will agree to extend the duration of the cuts.

The fact that it might end up being conditional for other producers to extend the production cuts rattled the oil markets, conversely sending prices lower. The oil producers need to agree on production cuts to stem a glut in supply that has plunged oil prices to record lows.

Gold under Pressure

Gold prices dropped by as much as 2% as risk sentiment in the market improved significantly. The opening of world economies in the aftermath of the COVID-19 pandemic has seen investors flock riskier assets shunning safe havens of the likes of Gold.

Gold Sell-off

Time                            : 04-06-2020

Pivot                           : $1706.04

Technical View           : Short below $1695.71

Target                         : $1685.38 next 2 targets are $1668.16 and $1647.65

Comments                  : Bearish

Last Price                    : $1705.23

However, gold prices did bounce back in early Thursday trading session supported a weaker dollar. The dollar has come under immense pressure in recent days following widespread riots in the U.S against police brutality. Souring tensions between the U.S and China also continue to offer support to gold prices.

Silver price per ounce, on the other hand, continued to match towards the $18 level. The rally comes at the backdrop of renewed demand for the precious metal in powering smart electronics as well as solar energy panels and 5G infrastructures.

Silver Rally

Time                            : 04-06-2020

Pivot                           : $17.66

Technical View           : Short Below $17.46

Target                         : $17.26 next 2 targets are $17.08 and $16.77

Comments                  : Weak bearish

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