Oil consolidates, gold steady

Oil markets content to consolidate gains

The range-trading continued in oil markets overnight, with both Brent crude and WTI content to consolidate price gains near to the top of their recent ranges. A neutral day for the US dollar saw buyers creep back in, pushing prices slightly higher overnight. High LNG prices in Asia are also benefiting oil prices indirectly.

Brent crude rose 0.80% to USD56.45 a barrel overnight, slipping to USD56.25 a barrel in Asia. WTI rose a more impressive 1.60% to USD53.65 a barrel, before edging lower to USD53.55 a barrel in Asia today. With the Biden package offset by weak US employment data, markets in Asia are disinclined to force prices one way or the other this morning. They will leave it to North America to decide if a retest of the recent highs is justified into the end of the week.

Both RSIs for Brent crude and WTI remain in overbought territory, suggesting that further downward pressure could persist. Any retreat lower will be due to a readjustment of positioning though and should not portend a structural change in oils outlook—Brent crude’s recent high at USD57.50 a barrel, and WTI’s at USD53.90 a barrel, need to break to set oil up for further rallies into the end of the week.

Gold treads water in Asia

A lack of movement in US yields overnight granted gold yet another reprieve despite some substantial intra-day volatility. Gold ranged between USD1829.50 and USD1857.00 an ounce but finished the session unchanged at USD1846.00 an ounce. Some weekend risk hedging is apparent in Asia, with gold climbing 0.25% to USD1851.00 an ounce.

Gold avoided closing below its 200-DMA at USD1841.00 an ounce overnight. But if it closes below there tonight, it would be a bearish technical signal. The overnight low at USD1829.50 an ounce and Monday’s low at USD1817.00 an ounce are the next support levels. Failure of USD1817.00 an ounce opens a retest of the psychological USD1800.00 an ounce level. Gold’s long-term critical support is the 61.80% Fibonacci at USD1760.00 an ounce. Resistance lies at USD1857.00 and USD1865.00 an ounce, followed by the 100-DMA at USD1890.00 an ounce.

Gold appears set for another range trading session, awaiting the next move in US yields and the US dollar.

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