Oil consolidates, gold slides

Oil maintains its gains

Oil managed to hold onto all its recent gains overnight, despite a surge by the US dollar, courtesy of a higher than expected Retail Sales report. Sky-high natural gas prices and 40% of the US Gulf of Mexico oil industry still being offline post-Ida continues to support prices. Brent crude rose just 0.15% to USD 75.60, and WTI was almost unchanged at USD 72.50 a barrel. Both remain around those levels in a quiet Asian session today. With natural gas prices continuing to rise, substituting oil for power and heating generation will become more appealing and that should continue to support prices, even at these levels.

Brent crude has resistance nearby at USD 76.00 and if that gives way, Brent crude should target the USD 78.00 a barrel area. Support remains at USD 74.00 a barrel, with failure signalling a deeper retreat to the USD 72.00 region. WTI has support at USD 71.00 a barrel while resistance remains just above at USD 73.00 a barrel, followed by USD 74.00 and USD 76.00 a barrel.

Gold finally collapses overnight

Gold prices finally collapsed overnight after the surge in US Retail Sales saw a strong rally by the US dollar. Gold fell by 2.25% to USD 1753.50 an ounce, a 40 dollar loss for the session. Support held at USD 1750.00, and some shot covering has lifted the metal by 0.40% to USD 1760.00 an ounce in Asia, but gold remains on fragile ground.

Gold faces another test of USD 1750.00 if the US dollar remains firm today. It is clear a lot of speculative long positioning was culled overnight, and the question is, how much is still out there. Looking at the price action overnight, I would say quite a lot.

If support at USD 1750.00 fails, gold could target the USD 1715.00 area, potentially testing longer-term support around USD 1675.00 an ounce. Gold’s nearest resistance is now the overnight breakout point at USD 1780.00 an ounce.

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