Oil and gold in consolidation mode

Oil consolidates as consumption fears persist

Friday saw a partial unwinding of Thursday’s price rout, with both Brent crude and WTI finishing higher. Brent crude rose 2.60% to USD64.50 a barrel, with WTI climbing 3.25% to USD61.40 a barrel. Both contracts have eased by 30 cents a barrel in Asia as Germany’s lockdown extension and the partial lockdown in France continues to weigh on EU consumption sentiment.

With Europe’s problems not likely to disappear overnight, Asia physical buyers are content not to chase the market higher. A light data calendar in the first half of the week means that short-term moves in the US dollar are likely to drive short-term movements in oil prices as well.

Brent crude has support at USD62.00 andUSD61.30 a barrel, with resistance at USD65.00 and USD66.50 a barrel. WTI has support at USD59.00 and USD58.00 a barrel, and resistance at USD62.00 and USD63.20 a barrel.

Gold’s consolidation continues

Gold prices roses on Friday as long yields eased, but overall, gold’s limited price action was a continuation of the bullish consolidation of prices seen over the week. Gold rising 0.50% to USD1745.00 an ounce. In Asia, gold has eased back to USD1741.00 an ounce in directionless trading, having spiked lower on the open, which I suspect was related to Turkish lira position stop-losses.

Gold’s overall price action remains construction, though, and the yellow metal is attempting to form a longer-term base, between its 61.80% and 50.0% Fibonacci retracements, setting the scene for a move back above USD1800.00 an ounce if all goes to plan.

Gold has support at USD1720.00 and USD1700.00 an ounce, followed by the 61.80% retracement in the USD1685.00 area. It has initial resistance at USD1755.00 an ounce, followed by the 50.0% retracement at USD1760.00 an ounce. I expect gold to trade in a USD1735.00 to USD1750.00 an ounce range ahead of the New York session.

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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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