Overnight data fails to spark oil as Gold is starting to possibly look overextended in the short term.
Gold’s listless trading continued overnight with a more bearish tone in early Asia trading to start the day following its overnight failure to close above 1270 for the third day in a row. Holiday markets aside, the extended short term long positioning and a lack of upside momentum may be signalling that a correction lower may be on the cards. At least in the near term.
Gold traded up to 1270.50 overnight but then fell to finish 1262.80, down some -0.5 percent. Gold is presently 1261.40 in early Asia, just above rising trend line support at 1260 with a break targeting 1253 followed by the key 1245 region.
Resistance continues to be in the 1270/1272 area, which has contained gold for all of May. We will need to see a daily close above this level to signal more gold strength in the short term.
Silver looks a little ominous as well, failing at the 100-day moving average and yesterday’s high at 17.4750. The 200-day moving average is just above here as well at 17.6000, meaning silver has some wood to chop at those levels.
In the bigger picture, the technicals show silver continuing to trade constructively but a break of near term support at 17.2000, yesterday’s low, may have a few traders questioning this view. A break of the next support at 16.9000 could see more short-term long positioning retreating to the sidelines.
Oil prices weakened slightly overnight but overall, both contracts appear to be in a consolidation range. A lack of news and a listless dollar contributed to the becalmed nature of Brent and WTI with the street now looking ahead to tomorrow night’s U.S. Crude Inventory Report. With an expected drawdown of minus 3 million barrels, the main risk will be a lower than expected drop which would see crude prices come under pressure again.
Brent spot opened at 52.00 this morning, unchanged from its New York close. Initial resistance is at 52.70 and 53.00 with support at 51.30 and 50.70.
WTI spot is also unchanged at 49.40 in early trading. Resistance is at 50.00 where it failed on Monday followed by 50.60 its 100-day moving average. Support is at 48.75 followed by the more important 48.85 region.