Oil prices fall, gold range trades

Oil markets fall in Asia

It is a measure of the holding pattern financial markets find themselves in, with oil ignoring equity nerves and a stronger dollar overnight, with both Brent crude and WTI finishing the day higher. However, the negative sentiment sweeping Asia today, as the reality of US stimulus politics dawns, has seen both contracts move lower.

Brent crude rose by 1.60% overnight to USD55.95 a barrel but has retreated by 0.75% to USD55.50 a barrel in Asia. WTI rose 1.50% to USD52.85 a barrel overnight but has retreated by 0.75% to USD52.45 a barrel in Asian trading. That leaves both contracts bang in the middle of the January ranges, suggesting that they too are awaiting signals for their next directional move.

Despite the fall in Asia today, oil itself continues to consolidate at the top of the range of its rallies from the November lows. The Saudi Arabian cuts, OPEC+ compliance above 85.0% and an insatiable demand from Asia means that oil has seen its cyclical lows for 2021.

Brent crude is bound by resistance at USD56.60 and USD57.40 a barrel, with support at USD54.50 a barrel. WTI has resistance at USD54.00 a barrel, and support at USD51.60 a barrel. Clearance of those levels, either way, will signal oil’s next directional move. In the meantime, I expect the noisy range-trading to persist.

 

Gold patiently awaits further inspiration

Another sideways day of range-trading for gold overnight led to another unchanged close for the session. Gold meandered in a 20-dollar range before closing where it had started, at USD1856.00 an ounce. Asia has not been much better, with gold creeping just 0.23% higher to USD1860.30 an ounce in directionless trading, boosted by a small fall in US yields.

Gold has resistance at USD1875.00 an ounce, followed by the 100-day moving average (DMA) at USD1882.30 an ounce. Modest support appears at the previous two sessions’ lows of USD1847.00 and USD1837.00 an ounce respectively. The January 18th spike follows that at USD1802.50 an ounce.

With the 200-DMA at USD1847.50, and the 100-DMA at USD1882.30 an ounce, slowly but surely converging, a large directional move by gold is in the offing. Unfortunately, the charts give no hint as to which way that move will be. The FOMC decision and the press conference after should help that process along. Until then, choppy range-trading between USD1825.00 and USD1875.00 an ounce is likely to persist.

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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