Oil surged on speculation that central banks from Europe to China will ease monetary policy to spur growth while sanctions against Iran curb supply.

Prices gained as much as 5.1 percent as the European Central Bank is forecast to cut interest rates this week. A state-owned newspaper in China said the time is right to increase liquidity in the banking sector. Iran fired several missiles during a three-day military exercise as the country threatened to block tanker traffic in the Strait of Hormuz.

The European Central Bank and the Bank of England will announce interest-rate decisions on July 5. ECB officials will lower their benchmark rate by 25 basis points to a record low 0.75 percent, according economists surveyed.

A European Union embargo on Iranian oil took full effect on July 1 after exemptions on some contracts and insurance ended. Iran’s crude exports may drop to about 1 million barrels a day, Goldman Sachs said in a report yesterday. The country pumped 3.16 million barrels a day in June, the second biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, according to estimates.

Iran’s parliament is working on a bill to close the Strait of Hormuz to oil tankers linked to countries applying new EU sanctions, a lawmaker from the national security committee told Jam-e-Jam newspaper yesterday. The waterway is a transit route for a fifth of the world’s crude.

Iran’s Revolutionary Guard Corps “successfully” fired several missiles, including long-range ones, in a military exercise that began yesterday, the official Islamic Republic News Agency said in a report published today.

Oil for August delivery climbed  to $88.04 a barrel on the New York Mercantile Exchange. Prices are 12 percent lower this year.

Brent for August settlement traded above $100 a barrel for the first time since June 11. The futures gained $3.32, or 3.4 percent, to $100.66 on the London-based ICE Futures Europe exchange.

Resistance 3: 1660 (MA (200) for D1)

The resistance of 2:1640 (high of June, MA (100) for D1)

The resistance of 1:1620 (resistance line from Jun 6)

Current Price: 1619.70

Support 1:1607 (earlier resistance, Jun 29 high)

Support 2:1595 (session low)

Support 3: 1587 (Jul 2 low)

Gold prices rise as the market expects that after a series of weak economic data statistics of the world's leading central banks resort to further ease policy.

Index of ISM, which reflects activity in the manufacturing sector of the U.S. economy in June fell to 49.7 points from 53.5 points in May, with projections of 52 points.

Activity in the euro zone manufacturing sector is also declining, and unemployment rose in May.

Many analysts expect the European Central Bank meeting on Thursday to reduce interest rates by 25 basis points to a record low of 0.75 percent per annum. Also, the market expects that the U.S. Federal Reserve will announce the third phase of "quantitative easing" at a meeting July 31 - August 1.

Low interest rates are usually favorable for gold, not bearing interest, since the reduced opportunity cost of investing in precious metals as compared to financial instruments.

August gold futures on the COMEX today, went up to 1620.7 dollars per ounce.

Resistance 3: 95,00 (61.8% FIBO $ 106 - $ 77)

Resistance 2:91,60 / 90 (50.0% FIBO $ 106 - $ 77, May 29 high)

Resistance 1:88,20 (38.2% FIBO $ 106 - $ 77)

Current Price: 87.17

Support 1:85,10 (earlier resistance, Jun 29 high)

Support 2:82,00 (Jul 2 low)

Support 3:77,50 (low of June)

Change % Change Last

Gold 1,598 0 -0.01%

Oil 83.69 -0.06 -0.07%