Oil edges higher, gold eyes USD 1800

Oil edges higher on Libya concerns

Oil edged higher overnight, with the Biden capital gains tax plans having no noticeable effect on sentiment. News that Libyan oil production was falling due to cashflow constraints lifted prices modestly. Energy markets remain in a holding pattern ahead of the next OPEC+JTC next week, and with India consumption concerns capping gains.

Overnight Brent crude rose 1.0% to USD65.70 a barrel and remain unchanged in Asia. WTI rose 0.95% to USD61.65 a barrel, adding 10 cents to USD61.75 a barrel in muted Asian trading. The price action leaves both contracts roughly in the middle of their one-week ranges, albeit with noisy intra-day moves. Like currency markets, energy markets appear content to await stronger directional signals next week.

Brent crude has support at USD64.00 a barrel and resistance at USD68.00 a barrel. WTI has support at USD60.50 a barrel, with resistance around USD64.00 a barrel. At this stage, the chart patterns suggest the downside remains the weaker side of the price equation into next week.


Gold retreats ahead of USD1800.00

Gold rose to near USD1800.00 an ounce yesterday but could not sustain the momentum as the US dollar strengthened after the Biden capital gains tax story hit the news wires. For once, gold disconnected from the US 10-year Treasury, with yields there also easing ever so slightly. However, one day does not a structural disconnect make, and gold’s rally will come under a severe test if the US 10-year yield spikes higher.

That aside, the technical picture of gold in isolation remains compellingly bullish. Gold fell 0.55% to USD1784.00 an ounce overnight but has rallied to USD1787.00 an ounce today—weekend risk hedging by Asian investors lifting prices.

Gold has formed a double bottom just ahead of USD1775.00 an ounce, which will provide intra-day support. Similarly, it has developed a double top at USD1798.00, just ahead of the 100-day moving average at USD1803.00 an ounce. A break of USD1775.00 or USD1803.00 should see a 15 to 20 dollar move; otherwise, gold looks rangebound into the end of the week.

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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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