Crude Oil
Oil edged lower after President Trump said he would postpone a planned strike on Iran that was scheduled for Tuesday, allowing time for further negotiations. Additionally, Washington also suggested a temporary waiver on the oil sanctions imposed on Iran until a deal was finalized. After gaining 2.6% in yesterday’s session, Brent dipped to around $110 per barrel while WTI traded near $103 per barrel. That said, President Trump also said that the U.S. was prepared to attack if talks failed. As a result, even though oil prices may have pulled back from their wartime highs, the broader risk still appears tilted to the upside as the U.S. and Iran remain far apart on any meaningful agreement to end the conflict and reopen the Strait of Hormuz.
So far, oil prices have not shot past their war-time peak due to temporary buffers including emergency stockpile releases from OECD countries and record-high export flows from the U.S. That said, even if Hormuz were to reopen immediately, the market would still face a long road back to normality. Restarting shut-in oil fields, restoring damaged infrastructure, and bringing shipping flows back to full capacity could take months, meaning the overall supply hit remains in focus. This has kept oil prices anchored – Brent crude averaged around $99 per barrel in March, $102 in April, and nearly $107 so far in May. As long as the current stalemate persists, the underlying pressure on crude prices remains upward, while any renewed escalation in Middle East tensions could trigger a far sharper rally.
Brent is up 0.84% at $110.27, trading just above immediate support marked by the confluence of the 9-SMA and 21-SMA on the day chart. A break below this level could bring Brent to $106.97. Sustained moves above this level could propel the commodity higher to $114.80 and further up to $120. WTI is up 1.18% at $103.68, with immediate support at $97.50, marked by the convergence of the 9-day and 21-day SMAs. The commodity could test $107 and then rally further to test $112.
Gold and Silver
Precious metals remain under pressure amid higher oil prices and elevated Treasury yields. Despite notching slight gains yesterday, the downside risks still remain. Gold is trading around $4,540 (-0.5%), and silver is down at $76 (-2%).
Inflation concerns continue to support higher bond yields. The US 10-year treasury yield is back at 4.60%, above its recent high of 4.48%, and the US 30-year treasury yield is also above 5.10%, continuing its climb. The recent Fed minutes are likely to show growing divisions and a prolonged easing pause. On top of that, persistently elevated geopolitical risks- as the US and Iran are still far from a deal- are likely to keep expected inflation, treasury yields and the US dollar higher, creating near-term headwinds for precious metals. However, on the positive side, for the week ended May 15th, North America saw net inflows into gold ETFs of 5.4 tonnes, or $825 million, after a prolonged period of outflows, providing some support. Asia saw marginal weekly outflows.
Technically, the intraday bias for both precious metals remains moderately bearish. Gold is likely to face resistance at the 38.2% Fibonacci retracement (drawn from March highs to lows) around $4,600, followed by the 100-day EMA at $4,650. On the flip side, initial support is likely around yesterday’s low at $4,480, followed by $4,400. For silver, resistance is likely around $78-$79 (confluence of 21-day EMA and 61.8% Fib retracement from 10th March high to 23rd March low), while support could be found around $72 (38.2% Fib retracement).
Gold prices in the UAE today are as follows:
24 Carat – AED 547.25
22 Carat – AED 506.75
21 Carat – AED 486.00
18 Carat – AED 416.50
