Gold Shines as Oil Consolidates

Gold was the main beneficiary of the U.S. Dollars woes overnight as oil consolidates its recent gains.

Oil

Crude paused for breath overnight with both Brent and WTI trading in a one dollar range. It is perhaps unsurprising given the whipsaw nature of the market lately and no doubt open positioning from traders either long or short is much reduced.

Tonight’s American Petroleum Institutes (API) Inventory numbers should spark some life back into trading with perhaps the top side more vulnerable if we get another larger than expected drawdown. Both contracts are trading quietly in early Asia near to their New York closes with Brent spot at 48.45 and WTI spot at 46.15 respectively.

Brent spot has initial resistance at 49.15 followed by the more important 49.70/50.00 region. Support appears at 48.00 and then 47.00.

WTI spot has initial resistance at 47.00/47.20 with a close above implying a technical move to test the 100-day moving average at 48.00. Support is just below at 45.80 followed by the more significant 45.00 area.

Gold

Gold continued its positive tone overnight, albeit at a more subdued pace than Friday’s rally. Gold traded to a high of around 1236.00, and in the process, comfortably closed above the 200-day moving average at 1230.50, a bullish technical development.

With the street repricing its U.S. interest rate outlook following soft data and a dovish Yellen, and with President Trump’s reflationary reforms seemingly lost in the legislative Bermuda Triangle of Congress, a weaker U.S. Dollar should continue to support gold.

Gold trades positively in Asia, up four dollars at 1237.50 with early Asia physical demand evident. Initial resistance is at the 1240.00 region followed by the 100-day moving average at 1247.50. Intraday support appears at 1232.80 followed by the 1230.00 area.

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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