Oil Edges to Upper End of Range
Oil prices are edging higher again, lifted by positive risk appetite and a softer US dollar. Brent and WTI both remain near the upper end of their ranges, without really threatening a breakout at this moment.
Brent continues to see resistance around $45.50 region, with key support now being last weeks low around $43.50. WTI has similar resistance in the $43 area, with support coming from last week’s lows around $41.
Source – OANDA Advanced Charting
The fundamental situation hasn’t really changed, the global economic outlook is uncertain given the new waves of the virus around the world, OPEC+ left production cuts unchanged after raising output a little in August and US output has falllen considerably and isn’t yet picking up.
The softer dollar has been the only difference and even that has rebounded strongly. Oil producers will be comfortable with prices gradually moving into the mid-$40 range and avoiding damaged corrections along the way.
Gold cautiously higher
Gold is a little higher, trading around $1,950 this morning, with the weaker dollar giving it some reprieve. The rebound in the greenback really took the wind out of the sails of the gold recovery trade just as it was trying to break $2,000 again.
The dollar broke below key support but the bounceback was strong and immediate. The dollar index hasn’t broken 94 though so the bullish outlook for the yellow metal remains intact. Still, the most recent price action casts significant uncertainty over it, near-term. Eyes will be on those real US yields, with the 10-year hovering around -1% again.