OPEC+ rumours lift oil higher
Oil enjoyed another outsized night of gains as rumours spread that Russia and Saudi Arabia were erring to the side postponing January’s production increases. Most of the rally though was driven by the blue wave trade, with hopes of a giant stimulus lifting consumption, and the US dollar plummeting. Brent crude rose 2.10% to USD40.10 a barrel, and WTI rose 2.85% to USD38.10 a barrel. Both contracts have now rallied by around 6.50% over the past two days.
Brent crude is just shy of its 200-DMA at USD40.35 a barrel, with the USD42.00 a barrel area the next target after that. WTI has cleared its 200-DMA at USD36.80 a barrel and now targets USD40.30 a barrel, its 100-DMA.
Oil is unchanged in Asia this morning but is unlikely to stay that way. Like other markets, we expect a volatile session as voting results roll in from the US election. The relative strength indexes (RSI) of both contracts are in neutral territory, meaning that blue wave upside momentum has plenty of room to continue if the polls are accurate for once.
Gold hitches a ride with equities
Gold road equity markets’ coattails higher overnight, assisted by a much weaker US dollar. Gold rose 0.75% to USD1909.80 an ounce, just shy of triangle resistance at USD1912.00 an ounce, and its 50-DMA at USD1913.75 an ounce.
Gold is poised to invalidate the bearish triangle, and a break of the 50-DMA opens up further gains targeting USD1935.00 an ounce. Much of that rally will be predicated on continuing gains by equity markets, and US dollar weakness.
Gold has eased by USD7.00 to USD1903.00 an ounce this morning in Asia. Like other asset classes, the morning will be a very choppy one. I am expecting gold to range between USD1890.00 and USD1920.00 an ounce this morning. Longer-term investors may want to sit the Asian session out, watch the TV and give their blood pressure a welcome respite.
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