Oil and Gold Are Firm

Oil prices are ominously firm.


A weaker US Dollar spurred energy prices higher overnight, helped by Saudi Arabia comments that suggested OPEC+ would not be drawn into ramping up output due to natural gas prices. Only a surprise jump in official US Crude Inventories to 6.10 million barrels took the edge of oil’s rally towards the end of the session. Brent crude finished 0.90% higher at $84.10, and WTI closed 1.15% higher at 81.45 a barrel.


Despite oil prices being at the top of their weekly range, Asia has continued buying this morning, pushing Brent crude 0.45% higher to $84.50, and WTI 0.30% higher to $81.75 a barrel. The fact that Asian markets are content to chase prices higher at weekly highs, instead of lurking on price dips, is a strong signal that energy demand remains robust.


The relative strength indicators (RSIs) on both contracts have moved higher into overbought territory and I still do not rule out a violent $5 to $8 barrel retracement lower as a result. Any sell-off will be as short in duration as the fall, should it occur. Looking at the price action today though, it seems that oil could remains in heavily overbought territory for a few sessions yet.


Brent crude has support at $83.00 and $82.00 a barrel with a rise through nearby resistance at $84.60 a barrel signalling a move to $87.00 by early next week. WTI has support at $80.50 and $79.50 a barrel with resistance nearby at $82.30 a barrel. A close above signals further gains to $85.00 a barrel.


Gold testing important resistance.


A slightly softer US Dollar and improving general investor sentiment lifted gold lifted gold 0.16% higher to $1796.00 an ounce overnight. Intra-day it tested $1800.00 before edging lower. Although the speculative frenzy of the Wednesday was not evident overnight, gold has still manged to maintain all its gains and it now threatening to erode the $1796.00 to $1798.00 100 and 200 DMA resistance zone. Gold edging lower to $1795.00 in a sull Asian session.


Of course, gold’s fate is entirely in the hands of the US Dollar and its direction, trading almost perfecting in an inverse correlation at the momentum. If US Dollar momentum continues to fade throughout today, gold could well move through $1800.00 and onto $1820.00 an ounce. If, for some reason, the US Dollar strengthens again today, gold could well find the short-term fast money running for the exit. That could see a sharp drop through $1780.00 to $1760.00 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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