Oil prices steady, gold rises as dollar dips

Oil is surprisingly steady

Oil prices edged higher overnight as the volatility in currency, bond and equity markets passed it by; most of the oil-related data had already been released for the week. So, although the intraday ranges were as wide as ever, ultimately, oil booked only small gains. It has given those back in Asia today as regional traders react negatively to the China Commerce Ministry’s comments that domestic consumption and foreign trade faced difficulties. Oil looks set to range trade into the US data, and with the OPEC+ meeting next week, it may consolidate its recent gains over the next few sessions.

Brent crude rose 0.40% overnight to USD 107.60 overnight, falling by 0.75% to USD 106.80 in Asia. Resistance at USD 108.00 survived overnight, but a close above would be a significant bullish technical development, targeting the 100-day moving average (DMA) at USD 110.15. That is followed by USD 115.00 a barrel. Support is at USD 106.00, USD 104.00 and then USD 101.50 a barrel.

WTI traded in another giant four-dollar range overnight, finishing 0.90% lower at USD 97.25 a barrel as recession fears gripped US markets. It has fallen another 0.70% in Asia to USD 96.60 a barrel. WTI has resistance at USD 100.00, its overnight high. Support is at USD 96.00, the overnight low, followed by the 200-day moving average (DMA) at USD 95.00. WTI continues to look like the weaker of the two contracts on a technical analysis basis.

Gold rises on weak US dollar, medium-term low in place

Another fall in US yields on weak US GDP data was enough to inspire a decent rally in gold overnight, aided by a generally weaker US dollar. Gold surged 1.25% higher to USD 1756.00 an ounce, adding another 0.40% to USD 1763.00 in Asia.

The chart has been suggesting, albeit unconvincingly, that gold has been trying to trace out a medium-term low since testing and bouncing off longer-term support at USD 1780.00 an ounce on the 21^st of July. The price action since hasn’t been convincing, with the larger technical picture suggesting gold remained in danger. However, having taken our formidable resistance at USD 1745.00 an ounce overnight, the technical picture has convincing swung higher.

Gold should now trade back towards USD 1800.00 over the coming weeks if US yields remain soft. The breakout at USD 1745.00 now becomes support, followed by USD 1700.00 and USD 1680.00. Failure of USD 1675.00 would signal that the mother of all whipsaws has occurred. Resistance is now at USD 1780/1785.00 an ounce, followed by USD 1800.00 an ounce.

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