Oil consolidates, gold slides

September 17, 2021 Share Print 0

Oil maintains its gains

Oil managed to hold onto all its recent gains overnight, despite a surge by the US dollar, courtesy of a higher than expected Retail Sales report. Sky-high natural gas prices and 40% of the US Gulf of Mexico oil industry still being offline post-Ida continues to support prices. Brent crude rose just 0.15% to USD 75.60, and WTI was almost unchanged at USD 72.50 a barrel. Both remain around those levels in a quiet Asian session today. With natural gas prices continuing to rise, substituting oil for power and heating generation will become more appealing and that should continue to support prices, even at these levels.

Brent crude has resistance nearby at USD 76.00 and if that gives way, Brent crude should target the USD 78.00 a barrel area. Support remains at USD 74.00 a barrel, with failure signalling a deeper retreat to the USD 72.00 region. WTI has support at USD 71.00 a barrel while resistance remains just above at USD 73.00 a barrel, followed by USD 74.00 and USD 76.00 a barrel.

Gold finally collapses overnight

Gold prices finally collapsed overnight after the surge in US Retail Sales saw a strong rally by the US dollar. Gold fell by 2.25% to USD 1753.50 an ounce, a 40 dollar loss for the session. Support held at USD 1750.00, and some shot covering has lifted the metal by 0.40% to USD 1760.00 an ounce in Asia, but gold remains on fragile ground.

Gold faces another test of USD 1750.00 if the US dollar remains firm today. It is clear a lot of speculative long positioning was culled overnight, and the question is, how much is still out there. Looking at the price action overnight, I would say quite a lot.

If support at USD 1750.00 fails, gold could target the USD 1715.00 area, potentially testing longer-term support around USD 1675.00 an ounce. Gold’s nearest resistance is now the overnight breakout point at USD 1780.00 an ounce.

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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.