Oil and gold steady ahead of key FOMC meeting

Oil continues to mark time

Oil eased ever so slightly overnight, Brent crude falling just 0.40% to USD68.50 a barrel, and WTI falling 0.60% to USD64.80 a barrel. Those losses have been reversed in Asia, Brent crude climbing to USD68.70 a barrel and WTI to USD65.50 a barrel. The European woes have temporarily taken the wind from oil’s sails as markets price in a slightly lower global consumption because of it.

The net result is one of directionless range trading over the past few sessions as oil markets also await the FOMC. Brent crude is content bounce around in a USD67.50 to USD70.00 a barrel range. Meanwhile, WTI is anchored in a USD64.00 to v66.00 a barrel range.

Instead of trying to second-guess the FOMC, I retain the view that a daily close above or below the present ranges will signal a directional move of at least USD2.0 a barrel. I remain confident that a wall of physical buyers will meet any material dips in oil prices.


Gold continues to tease bullish investors

Gold finished unchanged at USD1732.00 an ounce overnight, climbing to USD1735.50 in a lifeless Asian session. Gold is clearly in a pre-FOMC holding pattern, but for once, it is circling from a position of strength. Gold’s price action continues to be supportive as it has shrugged off higher US yields and a stronger US dollar this week.

Gold needs to clear USD1740.00 an ounce, and most significantly, the breakout at USD1760.00 an ounce to give bullish investors the hope that the worst is over for gold. Support remains at USD1720.00 and USD1700.00 an ounce, and gold looks likely to stay in a USD1725.00 to USD1740.00 an ounce range ahead of the FOMC.

Tomorrow we will have a much better picture of whether gold’s longer-term downward correction is over, or if it was yet another false dawn.

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

Latest posts by Jeffrey Halley (see all)