Oil goes for a ride, gold drifting

Oil makes lots of intraday noise

Oil markets had another very choppy day overnight but finished only slightly lower than the day before. Despite a strong intraday rally after Ukraine-Russia talks finished without any progress, the 7.90% US inflation print raised the spectre of more and faster tightening by the Fed, lifting recession fears and sending oil lower. Brent crude unwound all its gains and finished 2.60% lower at USD 109.15 a barrel, while WTI finished 3.50% lower at USD 105.80 a barrel. Trading in Asia is quiet, both contracts losing 20 cents a barrel this morning.

Brent crude has nearby support at USD 106.00 a barrel, and WTI at USD 104.00 a barrel. Both contracts could well move sharply below USD 100.00 a barrel from here on any news perceived as easing supply disruptions. Similarly, both contracts could easily be back at USD 115.00+ on any negative headlines, it’s just that sort of market. Staying on the sidelines as oil markets become increasingly irrational will allow you to enjoy your weekend.

Gold trades sideways

Gold traded in a very choppy USD 40 an ounce range overnight, but as the dust settled, closed only slightly higher from where it opened, rising 0.20% to USD 1996.25 an ounce. Silver displayed similar price action and closed near to its finish the previous day. In Asia gold has eased slightly by 0.19% to USD 1991.00 an ounce in directionless trading.

The large intraday range overnight, and the almost unchanged close suggests to me that the real money was either stopped out or has chosen to move to the sidelines once again. That has left movements in gold at the mercy of the schizophrenic fast-money algo-gnomes, hence the overnight price action. Gold has had one of those sorts of weeks where unless you timed your entry and exit perfectly, you’ve probably had a tough week whether you were long or short gold.

With that in mind, I expect gold to range into the end of the week, supported by investor risk-hedging into the weekend. Support/resistance comes in at USD 1970.00 and USD 2010.00 an ounce which should cover it for the day. Obviously, a major headline hitting the wires will change that outlook.

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