Oil eases, gold falls as dollar rises

Oil slightly softer in Asia

Oil prices eased slightly on Friday, robust US data and weekend risk supporting prices, while US SPR releases as well as yet to be determined ones from other IEA members capped gains. A UN-brokered two-month ceasefire between Saudi Arabia and Yemen’s Houthi rebels has had no noticeable impact on prices today.

The China holiday is definitely muting trading volumes in Asia today, leaving Brent crude unchanged at USD 104.50, and WTI unchanged at USD 99.35. With mainland China, Hong Kong and Taiwan all on holiday tomorrow, I expect the first part of the week in Asia to be quiet.

Overall, I still expect Brent to trade in a choppy USD 100.00 to USD 120.00 range, with WTI bouncing around in a USD 95.00 to USD 115.00 a barrel range. The US SPR and monthly OPEC+ production hikes balanced out by geopolitical tensions elsewhere.

Gold fades as US dollar strengthens

Gold finished Friday on the back foot, falling 0.62% to USD 1925.00 an ounce. Higher US yields and a firmer US dollar continue to erode gold’s recent gains, with gold falling 0.37% to USD 1917.80 an ounce in Asia. A retreat below nearby support at USD 1915.00 an ounce should signal another test of USD 1900.00.

The risks of a material correction lower in gold are now increasing sharply, as it failed to make any gains when both the US dollar and US yields fell at times last week. Ominously, it moved lower as soon as they both rose. Gold has resistance at USD 1940.00 and USD 1950.00 an ounce. Meanwhile, a sustained break of the USD 1880.00 region will probably trigger a capitulation trade, potentially pushing gold down to USD 1800.00 an ounce.

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