USD a Downside Risk For Commodities

Oil pares losses but facing resistance

Oil is paring losses after breaking through major support on Tuesday, extending losses to more than 15% over the last week or so.

WTI has found some reprieve around $36, which roughly coincides with the April peak and June lows, so a notable prior area of support and resistance.

The rebound is running into immediate resistance around $37.50, the late June lows but $39 could be the key test. A move back above here takes us back into the prior range, while a rotation off these levels could signal more troubles ahead. Going into an uncertain period, both economically and politically, may not be ideal for crude prices.

Gold holding for now but USD a downside risk

Gold is edging lower again after finding some support around $1,900 yesterday.

With the dollar breaking out the upper end of its range, the yellow metal could continue to come under pressure in the days and weeks ahead, meaning that $1,900 level looks very vulnerable.

As ever, that doesn’t have any great impact on the longer term outlook for gold, which remains bullish, but in the near term we may be facing a period of $1,800-$1,900 trading, as opposed to what we’ve seen more recently.

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