Mr Kim Turns Gold and Crude Oil, off the Boil.

A perceived drop in North Korea threats and some weak data from China and Europe was all the excuse that stale crude oil and gold longs needed to head for the exit door.

Crude Oil

Crude oil prices tumbled overnight with both Brent and WTI spot falling some 2.60 % to close at their lows at 50.50 and 47.45 respectively. Numerous factors came together during the New York session to put the knife into oil and then twist it. A decrease in North Korea tension certainly helped along with weaker China and European data. It saw the U.S. dollar strengthen in general across the markets.

The EIA also adjusted its forecasts higher for U.S. shale production, but the cynic in me regards the backward looking Commitment of Traders (COT) report as the primary driver. Although a week out of date it showed that speculative traders (mostly hedge funds) had become firmly bullish on oil again. This fits perfectly with my comments in previous reports that stale speculative long positioning and a reluctance to hold unprofitable positions has been the main force behind the oil rally running out of steam over the last few sessions. Simply put, speculators have been long and wrong at unattractive levels.


Of the two contracts, WTI spot is looking the more vulnerable technically as it trades at 47.60 in early Asia. It broke and closed below its 100-day moving average overnight at 47.85, and this forms initial resistance followed by 48.25. A break of initial support at the overnight low of 47.30 sets the scene for a much deeper washout to possibly the 46.00 and 45.00 regions.


Brent spot is trading at 50.65 and clinging to its support at the 100-day average just below at 50.50. Resistance rests at 51.00 intraday. A break of 50.50 sets up a possible technical correction to support at 49.70.


Gold feel seven dollars to 1275.00 overnight as a resurgent U.S. dollar weighed upon precious metals. Weaker China and European data and a lack of chest thumping from North Korea diminished the safe haven appeal of gold following the weekend. We suspect the lull is only temporary however and gold will continue to be supported on meaningful dips.

This morning gold continues to hover around 1275.50, just above initial support at 1275.00. A daily close below here may imply a deeper correction to 1260.00 is on the cards. However, longer term bulls will only get concerned should the 100-day moving average at 1254.85 break.

Resistance lies at 1282.00 initially ahead of 1292.50 and then the formidable 1296.00 region which must break and consolidate before we can start talking about a structural move onto a 1300 handle.


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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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