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Oil Choppiness, Gold Pares Gains

Oil

Crude prices are stuck in the mud as an improving European outlook is countered with a weekly record for global infections. The energy market is paying close attention to India as the current surge is forcing refiners to shutdown and raise concerns over potentially new variants. The situation in India will likely see more countries impose travel bans. The UK has added India to the red list of travel ban countries and that trend will likely continue.

Despite a weaker dollar, oil prices seem stubborn. Energy traders might refrain from massive positions until after the OPEC+ ministerial meeting on April 28th. WTI crude seems poised to consolidate between the USD60 and USD65 levels.

Gold rally could be over

Gold prices have strongly benefited from the drop in Treasury yields, but it looks like that rally has hit a brick wall. The recent bullion rally could struggle to break beyond the key resistance level of USD1800 unless Treasury yields match last week’s drop. There is a tremendous scramble of adjusting tightening bets on the Fed and that could make it hard for gold to do much before we get past next week’s FOMC decision.

The outlook is becoming very bullish for gold, but in the short-term, prices could be in for a choppy period. While the fundamentals remain very strong for the US economy and that is eating away at safe-haven demand, the gold market is focused on the recovery across Europe and runaway inflation concerns across emerging markets. A stronger euro and hotter pricing pressures globally is what gold needs over the next several months to make a run towards the USD1,900 level.

The Federal Reserve blackout period is upon us and there is no major economic data until later in the week, starting with Unemployment Claims on Thursday.

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