Gold Treads Water Whilst Oil Wobbles

Decreasing tensions in Asia sees gold drop, but a murky French election will keep buyers interested on dips.

Gold regained some of its losses overnight to open in Asia at 1288. The net effect, however, was further consolidation within its recent trading range. Gold has a weaker USD, in general, to thank for that, as Goldman  Sach’s earnings miss led the Dow Jones Index lower overnight.

The yellow metal appears to be consolidating near its recent highs before attempting a test of 1300. Safe haven buyers appear to be around on any meaningful dip as we run into Saturday’s French elections, where the potential result is cloudy, to say the least.

Gold has initial support at 1278.50 with resistance at 1296.00. Key support remains the 1260 region with 1300 above signalling a potential new up leg if broken. In the meantime, gold will continue to trade of the nuance of the USD in the absence of any fresh geopolitical headlines.

Crude

The American Petroleum Institutes (API) Crude Stocks torpedoed oil late in the New York session, with a lower than expected draw down of 840,000 barrels. Both Brent and WTI fell through near-term support to trade down over one percent on the day.

Brent spot opened at 54.80 in Asia with WTI spot at 52.30. Brent has support nearby at 53.95, its 100-day moving average, with WTI’s 100-day moving average also nearby at 51.45.

Although Asia has seen some profit taking, a break of the New York lows could see more culling of recently built up long positions. All eyes will now turn to the official U.S. crude inventories report tonight, with an expected drawdown of -0.8 million barrels. Another undershoot here almost certainly setting up oil for a deeper correction.

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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