Oil drifting, gold remains steady

Oil markets drifting

Oil markets moved slightly lower overnight and today as a lack of new drivers prompted more profit-takers into the market ahead of the FOMC. Brent crude eased 0.55% lower to USD69.15 a barrel, and WTI lost 0.65% to USD65.15 a barrel. That has continued in Asia, both contracts edging another 40 cents lower to USD68.35 and USD64.75 a barrel, respectively.

Although oil’s underlying bullish case remains as constructive as ever, the loss of upward momentum could see both contracts weed out more speculative longs as the week goes on. Brent crude has support at USD66.50 a barrel, and WTI has support at USD63.15 a barrel. Failure sets up markets for a deeper correction ahead of the FOMC, although I expect that plenty of physical buyers will emerge in force on any dip.

On the topside, Brent crude has resistance at USD70.00 and USD71.50 a barrel. WTI has resistance at USD66.50 and USD68.00 a barrel.


Gold remains firm

Gold continues to weather firmer US yields and a stronger US dollar, shrugging of greenback strength overnight to record a 0.28% gain to USD1732.00 an ounce. That has continued in Asia, with the yellow metal edging higher to USD1735.00 an ounce.

Gold is now USD55.00 an ounce higher than last week’s lows, a quiet but impressive comeback. Despite the gains in recent days being modest in scope, it is significant they have come against a backdrop of moves elsewhere that have sent gold lower in recent times. That hints that underlying strength may be returning to markets. Of course, gold has made a career of disappointing bullish outlooks of late. But if it negotiates the FOMC, where I expect the Fed to disappoint markets on holding down yields, it may well be time to call a longer-term low for gold.

Gold has support at USD1720.00 and USD1700.00 an ounce initially. Resistance lies nearby at USD1740.00 an ounce, with the Fibonacci breakout at USD1760.00 an ounce, its largest obstacle. A daily close above USD1760.00 an ounce will signal further gains to USD1800.00 an ounce.

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, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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