Oil prices spike higher, gold stable

Oil moving higher

When one looks back at oil’s price volatility over last week, what stands out is the short-term gnomes rush from one side of the range to the other on a daily basis. So, despite a lot of intra-day noise, prices really went nowhere last week. Friday was much the same, the rally almost exactly unwinding the falls of the day before as the theme of the day became Hurricane Ida disrupted US production, despite no one really caring about the previous session. Nobody is better at fitting the most esoteric news stories to fit/justify the price action than oil markets.

Brent crude rose by 2.13% to USD 72.85 on Friday, with WTI climbing 2.40% to USD 69.60 a barrel, cancelling out Thursday’s price drops. Things have got a little more interesting in Asia with oil rising once again today, perhaps driven by the North Korean cruise missile test or news that Russia is struggling to raise production to meet its OPEC+ quotas. Either way, Brent crude is 0.40% higher at USD 73.15, and WTI is 0.55% higher at USD 69.95 a barrel. The latter may also be getting some post-Ida tailwinds.

Although it would not surprise me in the least if oil prices unwound their gains later today, with looking bid-at-the-top and offered-at-the-bottom oil’s Modus Operandi at the moment, today’s rally in Asia could potentially change the technical picture.

A rise by Brent crude through USD 73.70 a barrel could signal the rally has legs and target gains to the USD 776.00 a barrel area. Support is USD 72.70, followed by a big hole to USD 71.00 a barrel. Similarly, if WTI rises through resistance at USD 70.80, its rally could extend to USD 74.00 a barrel in the coming days. support is at USD 69.60, followed by a very little until USD 67.60 a barrel.

Gold nervously steady

Gold continues to range between USD 1780.00 and USD 1800.00 an ounce, with a slight rise in the US dollar on Friday, pushing it 0.38% lower to USD 1787.50 an ounce. Another directionless session in Asia has seen it creep 0.23% higher to USD 1791.60 an ounce.

Gold’s price action continues to be seriously underwhelming, unable to rally when the US dollar falls and moving lower when it rises. Gold needs to recapture and hold above USD 1800.00 an ounce this week, preferably USD 1830.00, to soothe the nerves of nervous long-positions.

The balance of probabilities is increasing, though, that gold has more downside ahead. A daily close below USD 1780.00 opens further losses to USD 1750.00 an ounce. Failure of the latter could see gold fall as low as USD 1700.00 an ounce. Resistance in the USD 1800.00 to USD 1805.00 an ounce area continues to cap insipid attempts at recovery.

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