Oil rallies on Omicron, gold drifting

Another rally for oil

The omicron is not-as-bad-as-we-thought trade continued to push oil markets higher overnight, with positive US data reinforcing the theme that the momentum of US recovery continues and that the US consumer is alive and well and spending.

Brent crude rose 1.55% to USD 76.75 a barrel. WTI rallied by 1.0% to USD 73.70 a barrel. With some US futures closed in Asia, only Brent crude is trading this morning and some profit-taking is evident. Brent crude is easing 0.70% to USD 76.20 in thin trading. USD 74.75 and USD 74.45 are initial support, with resistance at USD 76.90 a barrel, the 100-day moving average (DMA), capping gains overnight. WTI rose through resistance at USD 73.00 which becomes support. Resistance is at USD 74.10 initially, its 100-DMA.

Gold side-lined overnight

In line with tight ranges in currency markets and US bonds, gold was side-lined overnight, rising just 0.27% to USD 1808.50 an ounce. With gold futures closed in Asia, it remains around those levels.

Gold’s attempts to stage a meaningful recovery remain unconvincing, with traders cutting long positions at the very first sign of trouble intra-day. Gold lacks the momentum, one way or another, to sustain a directional move up or down. That said, gold could extend its gains into the end of the weak if growth sentiment remains ascendant.

Gold has formed a rough double top around the USD 1815.00 region which will present a formidable barrier, ahead of USD 1840.00. Support lies at USD 1790.00, followed by USD 1780.00 an ounce. USD 1790.00 to USD 1815.00 continues to be my call for the range for the week.

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