Oil steady, gold dips as US dollar rises

Oil markets slumber

Oil prices had another comatose session by their standards, barely rising from the day before. Nevertheless, both Brent crude and WTI have held on to all their recent gains, suggesting the weaker side is the upside in prices for now. While China slowdown fears are receding in the minds of traders, for now, fears persist around the increasing tightness of the US diesel market, and I suspect not ruling out export controls has unnerved international markets, and rightly so. I expect prices to remain firm for the rest of the week, with the global data calendar fairly light.

Brent crude rose 0.60% to USD 114.35 overnight, where it remains in an equally quiet Asian session. WTI rose 0.40% to USD 110.70, adding just 20 cents to USD 110.90 a barrel in Asia.

Brent crude has resistance at USD 115.00 and USD 116.00 today, with support at USD 112.00. A rally through USD 116.00 could set up a retest test of my medium-term resistance at USD 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will drag WTI higher as well, allowing a test of the USD 115.00 to USD 116.00 resistance zone.

Gold weakens on US dollar strength

Gold fell by 0.70% to USD 1853.25 an ounce overnight, retreating another 0.45% to USD 1845.00 an ounce in Asia. As I have touched on before, the true test of gold’s underlying strength will be maintaining gains in the face of a US dollar rally. The fall by gold over the last 24 hours in the face of modest US dollar strength does not fill me with confidence. Further US dollar strength could see gold face one of its ugly downside shakeouts.

Gold has nearby support at USD 1842.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. On the topside, gold has resistance at USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average.

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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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