Oil in choppy waters, gold directionless

Oil trades in a choppy range

Oil prices finished almost unchanged overnight, but that belied another large range intraday, with both contracts moving sharply higher before reversing. Russia’s moves on European natural gas continue to underpin prices, while global recession fears continue acting as a headwind.

Brent crude finished almost unchanged at USD 104.60, easing slightly to USD 104.45 in muted Asian trading. Notably, Brent crude rose above USD 107.00 once again overnight, only to retreat sharply. The series of daily highs between USD 107.50 and USD 107.70 a barrel is a formidable barrier. A daily close above USD 108.00 would now be a significant bullish technical development targeting the 100-day moving average (DMA) at USD 110.00, followed by USD 115.00 a barrel. Support is nearby at USD 104.00 and then USD 101.50 a barrel.

WTI finished 0.80% lower at USD 95.50 overnight, having traded as high as USD 99.00 a barrel intraday. In Asia, it has edged lower to USD 95.30. It looks the more vulnerable from a technical perspective, and a large gain by official US crude inventories tonight could spark more selling. WTI has resistance at USD 99.00, the overnight high, and then USD 100.00. The 200-day moving average (DMA) at USD 94.85 is nearby support, followed by USD 92.50 a barrel. A daily close under the 200-DMA would be a negative technical development.

Gold trades sideways

Gold was almost unchanged at USD 1717.50 an ounce overnight, where it remains in Asia, as its flatline price action continues. The charts continue to suggest that gold is trying to form a medium-term low; however, the price action remains underwhelming, and we will have to wait until we get into the meat of the week’s calendar to see if this scenario plays out. Like everything else, it is on hold for the FOMC now.

Gold needs to overcome heavy resistance at the USD 1745.00 an ounce triple top before the gold bugs can really start to get excited. ​ It has support at USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions.

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