Oil:
Oil closed yesterday just above $88 a barrel after European and American indices plunged during a very tense trading session.
With Spanish 10 year bond yields heading towards 8% and Greek austerity results on the line, on this occasion, no news is bad news for investors.
It would have been a big surprise to see high oil prices at this time while Europe is in great uncertainty, but on the other hand, investors have been used to shouts “crying wolf” from European markets for more than two years now.
It is difficult to say if a recession related to the 2008 global crisis is approaching but what is more certain is that Greece will have a much harder time exiting the Euro zone than fighting austerity impacts.
For now oil is mostly affected than by the US, the BRIC countries including China in particular, and tensions from the Middle East.
Analysts are not expecting that the PMI manufacturing result announcements from Europe today will affect the price of oil. We can expect stronger movements resulting from Canadian retail results and manufacturing results in the US.
Gold:
Gold has been trading sideways for more than two weeks now to the great delight of technical analysis traders. It is now trading at $1570 to $1590 levels.
Bad results from Europe today, especially from Germany, could once again appreciate the US dollar and lower the price of gold.
The conflict between stimulus expectations and bad economic results has started to fade away. If the markets stay tense, we will see that gold will not benefit.
The most effective resistance barrier for gold today will be the $1580 barrier, which could reasonably be approached but will be very difficult to retain.