Oil higher on stimulus hopes, gold drifts

Stimulus hopes lift oil prices

Oil unwound most of its previous day’s losses as US stimulus hopes saw fast-money traders buy oil. Brent crude leapt 3.25% to USD42.15 a barrel, with WTI jumping 2.05% to USD39.95 a barrel. The overnight price action has not moved the needle on oil prices; rather, it has left both contracts in range-trading mode.

Talks on a massive USD2.0 trillion fiscal stimulus package continue between Treasury Secretary Steven Mnuchin and Nancy Pelosi. An announcement of a stimulus deal should see oil prices jump again, but with quite a bit of expectation now built into oil prices, traders should exercise caution, as we have been led to water before by Capitol Hill. With much of Asia on holiday today, both volumes and trading interest will be muted.

Brent crude has resistance at USD42.60 a barrel, with support at USD40.50 a barrel. WTI has resistance at USD41.50 a barrel, with support at USD38.50 a barrel.

 

Gold trades sideways overnight

Speculative interest appears to have ebbed in gold overnight, with the yellow metal content to consolidate at the upper end of its recent trading range. Like other asset classes, gold is awaiting US fiscal news and a slew of heavyweight US data releases over the next 24 hours.

Gold edged through USD1900.00 an ounce overnight but gave up those gains to finish the session down 0.60% at USD1885.50 an ounce. A weaker US dollar this morning has lifted prices slightly, with gold climbing to USD1891.00 an ounce. For now, gold appears to lack the will or momentum to make a substantial test of the upside as it adopts a wait-and-see approach.

Gold has resistance at USD1903.00 and USD1920.00 an ounce, with support at USD1875.00 an ounce. Those levels should contain price movements until the Non-Farm Payroll data tomorrow evening.

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