Oil range trading, gold yawns

Oil’s range-trading continues

More lightening of speculative long positions was evident overnight, with both Brent and WTI retreating modestly. Despite that, we remain in a range-trading market, a situation that has been in place for nearly three weeks now. Brent crude fell 0.35% to USD55.50 a barrel, and WTI fell 1.0% to USD52.10 a barrel. In Asian trading, both contracts have added 20 cents a barrel in quiet trading.

Yesterday marked the third day in a row that oil has tested the upside, only to retreat by the end of the session and trace out modest losses. With the rectangle formations on both contracts now three weeks old, the inability to break out higher has increased the odds of a downward correction before the longer-term rally resumes. An increase in doubts about the timing of the vaccine-led recovery could produce the directional push lower.

Brent crude is bound by resistance at USD56.60 and USD57.40 a barrel, with support at USD54.50 a barrel. WTI has resistance at USD54.00 a barrel, and support at USD51.60 a barrel. Clearance of those levels, either way, will signal oil’s next directional move.

Gold staid while silver soars

The Robinhood Reddit-massive appear to have put silver in their sights overnight as it soared by 4.80% to USD26.4740 an ounce. I would suggest the Reddit army reads about Bunker Hill before trying to GameStop the silver market; it is an altogether different beast. Given the rally’s artificial nature, I will comment no more and watch from the side-lines.

Gold reflected the precious metals markets’ true nature overnight, closing almost unchanged at USD1843.00 an ounce, but below its 200-DMA at USD1849.00 for the send day in a row. Although notionally a bearish signal, the series of almost unchanged finishes over recent days raises doubts over momentum, and it could be a false signal. Gold has tested support near USD1830.00, and resistance near USD1865.00 an ounce numerous times this week but has failed to break out either way. That probably tells us that patience from the side-lines is the most sensible strategy for now.

Gold has resistance at USD1875.00 an ounce, followed by the 100-day moving average (DMA) at USD1880.00 an ounce. It has fallen through the 200-DMA at USD1849.60, which becomes an intra-day pivot point. Support is at USD1831.50, followed by the January 18th spike to USD1802.50 an ounce.

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