Gold approaches $1200, while WTI and FTSE slips

While the FTSE has suffered losses following the news regarding Tesco (LONDON:TSCO)’s results, I am looking at the increased possibility for further declines over the upcoming days. Not only is the UK financial sector likely to feel some pressure as the Greece deadlines loom closer, but investor sentiment is also going to be at further risk as the UK election edges nearer. The upcoming election is going to be extremely close, meaning that the FTSE could continue to look bearish. Additionally, the FTSE has a history of pulling back after reaching highs and it does look as though history is repeating itself yet again.

After falling as low as $1191, Gold is now consolidating around $1200 with it being possible that the uncertainty in Greece has increased appetite for the metal. In my opinion, Gold is pushing higher on global uncertainty and with interest rate expectations in the United States being pushed back, the sentiment towards the metal is turning more positive. The recent inflation data from the United States was weak, meaning it does seem unreasonable to expect the Federal Reserve to raise interest rates in June. We need further soft data from the United States to confidently push back interest rate expectations, but I am keeping a close eye on the $1209 level and if we rise above – the sentiment towards Gold is likely to turn bullish.

After WTI Oil failed to progress any further than $57, traders have taken the opportunity to take profit. The WTI markets are now looking bearish, with this probably being linked to reports that Saudi Arabia has concluded its recent airstrikes in Yemen. In my opinion though, the elephant in the room is the massive stockpiles of inventory that continue to weigh on oversupply concerns. Recent API data has shown a surplus of 5.5 million barrels of crude oil, with it also being possible that the weekly crude inventory report from the United States is going to be announced above expectations.

It is possible that we will see further softening in prices towards the $55.00 support level, and may even extend down towards $52.31. There was some optimism emerging that the oversupply might have reached a peak when last week’s US crude inventory report came in weaker than expected, however the surplus from the API does point towards the oversupply concerns remaining unsolved for now.


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