Oil and gold ease as dollar strengthens

Oil’s rally runs out of fuel

Despite a lower US dollar and upbeat US data, oil failed near its range highs and finished the day only slightly higher. Ample spot supplies and nagging doubts about the consumption picture moving forward continue to sap oils attempts to break out of the topside of its long summer-holiday ranges. The failure overnight suggests that incipient momentum has waned with more consolidation ahead.

Brent crude rose 20 cents to USD45.75 a barrel overnight and has climbed 15 cents to USD45.90 a barrel in Asian trading. On a positive note, the contract is holding above its 200-day moving average (DMA) at USD45.60 a barrel. Resistance remains Monday’s high at USD46.50.

WTI also edged 20 cents higher to USD43.05 a barrel overnight, where it has remained in the Asian session. It has resistance at USD43.50 and USD43.75 a barrel, with support lying at USD42.40 a barrel.

Tonight’s US EIA Crude Inventories may provide some short-term volatility but are unlikely to provide enough impetus to break oil out of its recent trading ranges.

Gold eases in Asia after a disappointing close

Gold traded as high as USD1992.50 an ounce overnight but failed well short of the USD2000.00 an ounce mark, retreating to finish the session a non-descript 0.15% higher at USD1970.50 an ounce overnight. The price action can only be described as underwhelming and disappointing and with one eye on currency and oil markets, suggests that upward momentum has stalled temporarily.

Indeed, gold could be in for a more decisive corrective move lower in the short-term, with prices falling by 0.40% to USD1962.50 an ounce in Asia today. More concerning is that gold’s primary driver, US yields, actually moved lower again overnight, yet gold could not sustain any advances.

Gold has initial support at USD1955.00 an ounce with a failure opening the possibility of a more substantial move lower to the bottom of its recent range around USD1920.00. The overnight high and the USD2000.00 an ounce region remain initial resistance zones.

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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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