Oil consolidates, gold falters

December 29, 2021 Share Print 0

Oil consolidates recent gains

Oil prices consolidated their Monday’s gains overnight in a sideways session for the second day running. US API Crude Inventories fell by just over 3 million barrels, supporting both contracts. Brent crude was unchanged at USD 78.95 a barrel, while WTI edged slightly higher to USD 76.10. Some long-covering is evident in Asia today in an otherwise nondescript session. Brent and WTI have moved 20 cents lower to USD 78.75 and USD 75.90 a barrel.

Brent crude has support at USD 77.20 a barrel, its 100-day moving average (DMA). It has resistance at USD 80.00 a barrel, where it failed overnight. WTI has support at USD 75.00 and then USD 74.35, its 100-DMA. It has resistance at USD 77.00 a barrel, near to its overnight high.

Gold rally falters

Gold probed the topside overnight, eroding resistance at USD 1815.00 but failing ahead of USD 1820.00 an ounce. It then quickly changed course, finishing the day 0.33% lower at USD 1806.60 an ounce. The price action is very much like gold lately, the perpetual bulls pushing prices higher, but then running for the exit at the first sign of trouble or a loss of momentum.

Gold’s attempts to stage a meaningful recovery remain unconvincing, with traders cutting long positions at the very first sign of trouble intra-day. It cleared the double top around the USD 1815.00 region but stalled just above at USD 1820.00. It faces resistance also at USD 1840.00 an ounce. 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.

With the US dollar looking more vulnerable to positive virus sentiment at the moment, gold could potentially move higher throughout this week, but I still doubt it could sustain those gains.

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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.