Oil drifts higher on positive data
Oil prices drifted higher overnight on positive PMI data but remain becalmed at the higher end of their one-month ranges. Italian, French, German and United Kingdom manufacturing PMI’s all climbed further into expansionary territory. But it was the US PMI’s that draw a collective sigh of relief from financial markets. Both the Markit and ISM Manufacturing PMI’s for July outperforming at 50.9 and 54.2, respectively. Brent crude rose 0.50% to USD43.85 a barrel, and WTI rose 0.80% to USD40.80 a barrel. In Asia today, both contracts remain almost unchanged.
Positive data indicating the tentative global recovery remains on track and falling US production continues to support prices on dips. However, a stronger US dollar and nagging Covid-19 doubts have yet to dissipate concerns enough to propel oil prices higher.
Until the balance of those factors is changed materially, oil prices will continue to range-trade and enjoy their summer holidays.
Gold consolidates recent gains
Gold climbed modestly to trace out a new record high at USD1987.00 an ounce overnight, before edging lower to finish the session unchanged at USD1978.00 an ounce. The intra-day dip to USD1960.00 an ounce was keenly sought, with gold content to consolidate its recent gains as it awaits events to spur price action from elsewhere. Buyers too, seem more than content to wait for dips to add to longs, rather than chase markets higher.
Although the case for higher gold prices is compelling, patience is likely to be the order of the day until the US Non-Farm Payrolls on Friday. Gold could yet inflict a downward correction on recent long positioning but needs to break support at USD1960.00 and USD1940.00 an ounce to do so. Resistance rests at the overnight high at USD1987.00 an ounce, followed by the USD2000.00 an ounce region.
Both gold and silver are unchanged in Asia, and a quiet session beckons for the rest of the day.