Oil and gold slip as dollar higher

Oil could be seeing minor correction

Oil prices have fallen by more than 2% on Friday, as widespread risk aversion weighs on commodity markets. Crude prices are coming off very promising levels so a little profit-taking is perfectly understandable. It appeared to still have positive momentum earlier this week but the mood has turned a little in the markets and oil is not immune.

We’re now seeing a double top forming which could signal more profit-taking in the near term, perhaps even a correction. It’s currently testing the lows from earlier this week, a break of which would complete the double top and may indicate a move back towards USD50 in WTI. Hardly cause for panic but a decent correction, nonetheless.

Gold down 1% as USD rebounds

Gold prices are also slipping again, as real US yields break a three-day losing streak which has weighed on the dollar and supported the yellow metal. A partial reversal of this is driving the move we’re seeing today.

What’s interesting is that the dollar index now has support at 90 and resistance at 91. A break of either of these could be very significant for the near-term outlook for the greenback. A break of 91 in particular would be bad news for gold and could once again see it testing USD1,800, even the November lows around USD1,765.

Risk aversion has been supportive for the dollar so that could be key in determining which direction that breakout will come. The next week could be very interesting in the markets.

Bitcoin survives another test of USD30,000

Bitcoin has had a rough week and it could have got much worse overnight. A break of USD30,000 could have been bad news but it managed to turn things round quickly to trade back around USD32,000 at the time of writing. This rebound may be enough to spur another round of buying by speculators buoyed by another strong defence of USD30,000 which is growing in significance.

I’m not convinced we’ve seen the last of it. We may see a small rebound now, just as we did earlier this month. But the price action we’ve seen this month suggests there’s some nervousness around these levels. It will certainly be an interesting watch over the coming weeks.

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