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Oil higher on stimulus hopes, gold drifts

Stimulus hopes lift oil prices Oil unwound most of its previous day’s losses as US stimulus hopes saw fast-money traders buy oil. Brent crude leapt 3.25% to USD42.15 a barrel, with WTI jumping 2.05% to USD39.95 a barrel. The overnight price action has not moved the needle on oil prices; rather, it has left both […]

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This article was originally published by Market Pulse

Stimulus hopes lift oil prices

Oil unwound most of its previous day’s losses as US stimulus hopes saw fast-money traders buy oil. Brent crude leapt 3.25% to USD42.15 a barrel, with WTI jumping 2.05% to USD39.95 a barrel. The overnight price action has not moved the needle on oil prices; rather, it has left both contracts in range-trading mode.

Talks on a massive USD2.0 trillion fiscal stimulus package continue between Treasury Secretary Steven Mnuchin and Nancy Pelosi. An announcement of a stimulus deal should see oil prices jump again, but with quite a bit of expectation now built into oil prices, traders should exercise caution, as we have been led to water before by Capitol Hill. With much of Asia on holiday today, both volumes and trading interest will be muted.

Brent crude has resistance at USD42.60 a barrel, with support at USD40.50 a barrel. WTI has resistance at USD41.50 a barrel, with support at USD38.50 a barrel.

 

Gold trades sideways overnight

Speculative interest appears to have ebbed in gold overnight, with the yellow metal content to consolidate at the upper end of its recent trading range. Like other asset classes, gold is awaiting US fiscal news and a slew of heavyweight US data releases over the next 24 hours.

Gold edged through USD1900.00 an ounce overnight but gave up those gains to finish the session down 0.60% at USD1885.50 an ounce. A weaker US dollar this morning has lifted prices slightly, with gold climbing to USD1891.00 an ounce. For now, gold appears to lack the will or momentum to make a substantial test of the upside as it adopts a wait-and-see approach.

Gold has resistance at USD1903.00 and USD1920.00 an ounce, with support at USD1875.00 an ounce. Those levels should contain price movements until the Non-Farm Payroll data tomorrow evening.

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