Oil trading sideways, gold range-trading

Oil trades sideways

Oil, once again, endured big ranges overnight, only to finish not far from where it opened. Once again, Brent crude and WTI saw some heavy selling intraday as markets tried to price in a plethora of central bank hikes and potential recessions. Unfortunately, none of that changes the fact that despite those risks, the world remains short of crude supply from OPEC+, and global refining capacity, squeezing gasoline and diesel prices higher in a stagflationary embrace. Little surprise then that physical buyers eagerly lapped up the overnight futures selling.

Brent crude fell to USD 115.60 intraday, only to reverse and finish 0.20% higher at USD 119.05 a barrel. WTI plummeted to USD 112.40 intraday, only to reverse impressively to finish 1.10% higher at USD 117.05 a barrel. In Asia, Brent has eased to USD 118.90 and WTI to USD 116.65 a barrel in what looks like a nothing session today.

With the battle between the physical buyers and the speculative sellers, either closing longs or turning short, set to continue, I won’t rule other another crazy intraday spike lower today in New York. but once again, I suspect it is doomed to failure. Brent crude has initial support is at USD 115.50, with resistance at USD 120.25 a barrel. WTI has support at USD 112.50, with resistance at USD 118.00 a barrel.

Gold’s range continues

Gold staged a decent recovery overnight as the US dollar fell and US yields retreated. Gold rose by 1.25% to USD 1857.00 an ounce, before retreating just as quickly on US dollar strength in Asia today. It has fallen 0.73% to USD 1843.50 in regional trading.

The overnight recovery, and equally fast retreat in Asia, demonstrate that gold’s fate is not its own. Despite the noise of this week, it still remains anchored in the middle of its one-month range. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever.

Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside.

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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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