Oil edges higher, gold range trades

April 6, 2022 Share Print 0

Oil prices are steady

Oil prices eased overnight in the face of a stronger US dollar, a slow news ticker from Eastern Europe, and continuing concerns over China’s growth as the Shanghai lockdown continued. Brent crude fell by 2.15% to USD 104.60 a barrel, with WTI falling 2.45% to USD 101.15 a barrel. With China returning today, it was business as usual with Asia walking in and buying. Brent crude has risen 1.10% to USD 106.70, and WTI has gained 0.80% to USD 101.90 a barrel.

Despite the back and forth markets, oil is range trading this week. The extent of the new Russian sanctions to be announced by Europe and the US today will have a more immediate impact on short-term direction. It is my base case is that Europe will leave Russian oil alone for now, although if they surprise and target this sector, prices should move sharply higher. In the meantime, China’s growth concerns seem to be tempering gains in oil markets.

I expect Brent to remain in a choppy USD 100.00 to USD 120.00 range in coming weeks, with WTI confined to a USD 95.00 to USD 115.00 a barrel range.

Gold’s consolidation continues

In another wax on, wax off session, a stronger US dollar pushed gold 0.48% lower to USD 1923.25 an ounce overnight. In Asia, moribund trading sees it slightly lower to USD 1922.50. Gold remains confined to a narrow but noisy USD 1915.00 to USD 1945.00 an ounce range.

The risks are still skewed to the downside for gold, especially if US yields and the US dollar keep climbing. Only a rally through USD 1970.00 changes that outlook temporarily. Failure of USD 1915.00 an ounce will signal a retest of important support at USD 1880.00.

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.

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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.