Oil prices jump, gold range-trading

[PocketOption]

Oil prices jump, gold range-trading

Oil prices soar overnight

Nerves broke in oil markets overnight, as the prospect of a European embargo on n oil, and reality dawning around e- negotiations, sent oil prices soaring. Brent crude leapt 7.90% to USD 116.35 a barrel, with WTI rallying 7.0% to USD 112.00 a barrel. In Asia, as with the last few sessions, we have seen buying from the get-go, Brent rising 2.50% to USD 119.20, and WTI rising 2.60% to USD 115.00 a barrel.

 

What is most significant was that oil has continued to rally aggressively even after the EU dismissed the idea of an oil embargo on . It is clear that tensions are rising once again as no progress towards a e settlement is made. I still believe that Brent crude and WTI will continue to trade in a roughly USD 100.00 to USD 120 range, however. Even the most tenuously positive e news should see both contracts quickly back below USD 110.00 a barrel.

 

Gold stuck in a range

The one positive to take out of gold's price action overnight was that despite a rampant US dollar and much firmer US yields across the entire curve, gold still managed to eke out a modest gain, as e nerves appeared to inspire a bout of haven covering. Gold rose 0.80% to USD 1935.50 an ounce, where it remains in Asia.

 

The problem with haven buying is that it is a fickle beast and disappears as quickly as it emerges. In a global stagflation environment, gold remains one of the more attractive choices in an uninspiring list, but given its proclivity to stage sudden downside corrections, there is probably no need to chase prices at these levels.

 

Gold remains locked in a tight USD 1920.00 to USD 1950.00 an ounce range. A break either way should see another 30 dollars an ounce move. The risks are still skewed to the downside, with critical support at USD 1880.00. Failure signals a deeper correction targeting the USD 1800.00 regions.

Source: Oil prices jump, gold range-trading