Oil and gold trading sideways

Oil is bid despite its fall today

Oil prices were almost unchanged overnight, despite a massive 10 million barrel increase in US Gasoline Inventories, distillates rising by 4.4 million barrels and Crude Inventories falling only 2.5 million barrels, with Cushing Stocks climbing by about the same. That should all have been bad news for oil prices, implying that omicron is weighing on mobility and consumption. Even more especially, as US yields rose and the US dollar reclaimed intra-day losses. Instead, oil prices hardly budged and this, despite higher OPEC+ production, suggests that oil demand remains very robust indeed.

With the stock market sell-off deepening in US futures sweeping over Asia, and with some new virus restrictions in China, oil has finally moved lower. Brent crude and WTI fell by 0.45% to USD 79.70 and USD 78.80 a barrel. Given the sell-off in equity markets though, the move lower in oil is minuscule in comparison and oil prices are constructive.

Brent crude has support at USD 78.60 and USD 77.85 barrel, its 100-day moving average (DMA). It has resistance here at USD 80.00, and then USD 82.00 a barrel.  WTI has support at USD 75.75 and then USD 74.90, its 100-DMA. It has stout resistance at USD 77.50 and then USD 78.50 a barrel.

Gold’s range trade continues

With US yields and the US dollar holding their gains but trading sideways, gold eased 0.25% overnight to USD 1810.30 an ounce, edging another 0.25% lower to USD 1805.75 an ounce in Asia. Given the price action overnight, it appears that gold is still vulnerable to higher US yields and a higher US dollar. Any rallies should be approached with a great deal of caution and scepticism.

USD 1790.00 to USD 1820.00 remains my call for the range this week. Gold has resistance at USD 1830.00 and USD 1840.00 an ounce, although it would be a huge surprise if we saw those levels. Support lies at USD 1798.00, followed by USD 1790.00 and USD 1780.00 an ounce.

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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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