Brent Oil:

Brent Oil is trading at around 109 dollars after a good move yesterday. Yesterday, the main event, Fed’s meet happened and that has cheered the markets to a bit. But, the United States markets came down after that small rally and ended flat. The economy is in an uptrend and because of that, the demand for Oil will also go on improving.

This demand will move higher once the Dow Jones breaks that high of 14000. Oil has some worries in the form of inventories and stock pileups. The past few weeks inventory has been rising and that is not a good sign for oil. But, oil has been able to digest all that bad news and move higher. Oil has major resistance level at 111 dollars and that will be a hurdle for Brent Oil to cross.

Natalie Rampono, a commodities analyst at ANZ, said, \”The fiscal cliff continues to be a concern and we\’ve got negative data out of the United States in terms of oil inventories. Supply is still very high in the United States and the high distillates stocks indicates demand is pretty weak, although it should be strong at this time of the year. The supply is getting a bit tighter in the Middle East because demand is improving in Asia.\”

The stock pileups have been higher than expected in the past few weeks and that deteriorating the sentiment among these investors. China’s data also proved to be a dampener and Oil has been consolidating since then. Another reason why Oil prices are moving high is the tension in the Middle East countries. Due to the tensions there, the demand for Oil has been rising and that has been supporting oil prices from the past 1 year.

Gold:

Gold is slowly drifting down and is down over 1 percent to close at 1700 dollars per ounce. This level has been an important support level and a break of this level may take gold down to 1675 dollars per ounce.

A Tokyo-based trader said, “This announcement is a bit confusing to gold investors as it linked policy to unemployment, etc. Perhaps the market wanted unlimited quantitative easing. Physical demand seems to be supportive, but can\’t offset all investor selling.”

Yesterday, the Fed’s meet also had some effect on Gold. As the Dow Jones moved up, investors started selling gold and moving in to the equity markets. That made gold to fall below its 10 day moving average. However, gold didn’t recover even the Dow Jones close flat. Dow Jones is clearly in an uptrend and that is the reason gold has been consolidating in the past few months.

A strong dollar is also dampening the sentiment in this commodity. Jeremy Friesen, commodity strategist at Societe Generale, said, “The near term risk is a stronger dollar. The \’fiscal cliff\’ is going right to the end, and that could be support the dollar and take some shine off gold.” So, the near term risks remain for gold.

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Category: Finances
Keywords: Fed, Concentrates, Unemployment Data