Oil consolidates, gold steady

Oil markets content to consolidate gains

The range-trading continued in oil markets overnight, with both Brent crude and WTI content to consolidate price gains near to the top of their recent ranges. A neutral day for the US dollar saw buyers creep back in, pushing prices slightly higher overnight. High LNG prices in Asia are also benefiting oil prices indirectly.

Brent crude rose 0.80% to USD56.45 a barrel overnight, slipping to USD56.25 a barrel in Asia. WTI rose a more impressive 1.60% to USD53.65 a barrel, before edging lower to USD53.55 a barrel in Asia today. With the Biden package offset by weak US employment data, markets in Asia are disinclined to force prices one way or the other this morning. They will leave it to North America to decide if a retest of the recent highs is justified into the end of the week.

Both RSIs for Brent crude and WTI remain in overbought territory, suggesting that further downward pressure could persist. Any retreat lower will be due to a readjustment of positioning though and should not portend a structural change in oils outlook—Brent crude’s recent high at USD57.50 a barrel, and WTI’s at USD53.90 a barrel, need to break to set oil up for further rallies into the end of the week.

Gold treads water in Asia

A lack of movement in US yields overnight granted gold yet another reprieve despite some substantial intra-day volatility. Gold ranged between USD1829.50 and USD1857.00 an ounce but finished the session unchanged at USD1846.00 an ounce. Some weekend risk hedging is apparent in Asia, with gold climbing 0.25% to USD1851.00 an ounce.

Gold avoided closing below its 200-DMA at USD1841.00 an ounce overnight. But if it closes below there tonight, it would be a bearish technical signal. The overnight low at USD1829.50 an ounce and Monday’s low at USD1817.00 an ounce are the next support levels. Failure of USD1817.00 an ounce opens a retest of the psychological USD1800.00 an ounce level. Gold’s long-term critical support is the 61.80% Fibonacci at USD1760.00 an ounce. Resistance lies at USD1857.00 and USD1865.00 an ounce, followed by the 100-DMA at USD1890.00 an ounce.

Gold appears set for another range trading session, awaiting the next move in US yields and the US dollar.

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

Latest posts by Jeffrey Halley (see all)