Oil slumps in Asia
On Friday, oil prices retreated after the soft Non-Farm Payrolls as investors fretted that the economic recovery was faltering, thereby reducing consumption. Brent crude fell 0.50% to USD 72.40, and WTI fell 0.80% to USD 769.20 a barrel.
The sombre mood has continued in Asia after Saudi Arabia cut prices by USD 1.00 dollar a barrel to Asian customers. Saudi Arabia was expected to cut prices to Asian customers today, but the cut was higher than expected. That has seen Brent crude and WTI retreat by another 0.95% to USD 71.75 and USD 86.55 a barrel, respectively, this morning.
Given that OPEC+ is continuing its plan to raise production monthly, despite weak data from China and the US raising slowdown fears, and Saudi Arabia looking for market share in the region, oil is likely to remain under pressure. This week, the data calendar is relatively thin of tier-1 releases globally, meaning sentiment will drive market moves.
That should keep oil offered on rallies with resistance on Brent crude at USD 72.50 and USD 73.70 a barrel. A fall through the 100-DMA at USD 71.15 a barrel signals a retest of USD 70.50 and USD 70.00 a barrel. Things could get ugly below USD 70.00 a barrel. WTI has resistance at USD 70.50 a barrel and is testing its 100-DMA support at USD 68.60 this morning. Thinned liquidity could see support at USD 67.00 a barrel threatened.
Gold still looks unimpressive
A lower US dollar and easing US yields post-payrolls lifted gold prices on Friday. Gold finished the session 1.0% higher at USD 1828.00 an ounce, easing to USD 1826.00 in a moribund Asian session.
The rally on Friday was unimpressive, despite the headline figure. The Non-Farm Payrolls miss was a ripe environment for gold to stage a powerful rally as Fed tapering fears were swept off the table. Instead, all gold could manage was a modest rally that never threatened the major resistance zone lying just above between USD 1830.00 and USD 1834.00 an ounce.
Although a daily close above USD 1835.00 an ounce clears the technical picture for a move to USD 1900.00, gold appears to be running out of time to do so. The price action on Friday reinforces that gold’s upward momentum is waning.
Gold investors must now hope that US traders return to the office tomorrow and start selling US dollars meaningfully to keep hopes of higher prices alive. If gold falls through support bounded by the 100 and 200-DMAs at USD 1815.50 and USD 1809.50 an ounce, gold could fall to USD 1780.00 an ounce.
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