Oil choppy, gold breaks past 1800

Oil searches for equilibrium

Oil prices have endured another choppy range-trading week, although, by the standards of early December, the volatility remains modest. A continuing recovery ex-China and the threat of OPEC+ moving suddenly is offset by an easing energy crunch in China and omicron growth fears. That has left oil markets looking for a more settled equilibrium price until the narrative convincingly changes one way or the other.

Brent crude rose 0.40% to USD 74.60 overnight, easing to USD 74.30 in Asia. It looks set to trade between its 100 and 200-day moving averages (DMAs) at USD 76.80 and USD 73.20 into the year-end. WTI climbed by 0.70% to USD 71.95 overnight, easing to USD 71.60 in Asia. It has clearly denoted resistance above USD 73.00 a barrel, followed by its 100-DMA at USD 74.00. Its 200-DMA at USD 70.50, and technical support at USD 69.50 a barrel, should contain any sell-offs.

Gold’s recovery continues

Gold spiked higher overnight, continues its post-FOMC recovery. Gold finished 1.25% higher at USD 1799.00 an ounce, an impressive rally in two days from its post-FOMC lows around USD 1753.00 an ounce. In Asia, the rally has continued, with gold rising 0.30% to USD 1805.00 an ounce as local investors put on risk insurance for the weekend.

Gold has now cleared and closed above its 50, 100 and 200-DMAs at USD 1789.00, USD 1795.00 and USD 1786.50, an ostensibly bullish technical move. As ever, though, the rally overnight has more than a small hint of desperate fast-money to it. Gold bulls have been led to water before, only to find a massive Nile crocodile awaiting them in the watering hole.

The jury is still out on whether the rally is sustainable, although US dollar weakness continues, combined with year-end risk hedging, there may still be juice left in it. Gold has resistance at USD 1810.00 and USD 1820.00 an ounce and that could possibly extend to USD 1840.00 an ounce. Readers should tread with extreme caution if we see that level before the month-end.

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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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