Oil prices continue edging higher
Oil prices are proving invulnerable to outside influence now, as the backwardation of the prompt futures curves underpins prices and highlights the strong physical demand. Overnight, Brent crude rose 0.66% to USD73.10, and WTI rose 0.55% to USD71.20 a barrel. Both contracts remain almost unchanged in subdued Asian trading.
Brent crude has nearby resistance at USD73.30, followed by USD76.00 a barrel, and only the failure of USD70.00 a barrel undermines the bullish outlook. WTI has resistance at USD72.50, followed by USD75.00 a barrel. Again, only a fall through USD68.00 a barrel changes its bullish outlook.
That oil has rallied so significantly in the face of notable US dollar strength suggests the rally has plenty left in it, as does the widening of the futures curve backwardation.
Gold vulnerable to a deeper correction
Gold endured a torrid overnight session, falling over USD30 an ounce to USD1844.50 at one stage before recovering to finish the session 0.60% lower at USD1866.00 an ounce. Gold moved lower in early Asia but held USD1860.00 an ounce and is now unchanged for the session.
The price action overnight suggests that quite a few stop losses were executed, with quite a bit of speculative long positioning put on near to USD1900.00 an ounce. The strong rally in the crypto-space will not be helping gold either, and if the US dollar or cryptos continue rallying, gold may face another downside test.
The USD1840.00 to USD1845.00 an ounce support region remained intact overnight. This continues a series of previous daily highs and the 200-DMA at USD1840.60 an ounce. Bullish traders can take heart that the support region held fairly well, but the recovery was modest in scale. Failure of USD1840.00 an ounce on a closing basis signals a more significant fall to the 100-DMA at 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.