Oil rallies, gold climbs as dollar sinks

Oil rises once again overnight

Oil prices climbed once again overnight, boosted by a weaker US dollar and a large drawdown of crude and gasoline stocks in the overnight official US Crude Inventory data. The inventory data was a surprise, and in combination with tumbling Russian natural gas supplies to Europe, it seems the reality that the physical market is as tight as ever is boosting prices.

Brent crude rose 2.45% overnight to USD 107.15 a barrel. In Asia, it has gained another 0.30% to USD 107.50, and it is testing formidable resistance at this level. A daily close above USD 108.00 would now be a significant bullish technical development targeting the 100-day moving average (DMA) at USD 110.15, followed by USD 115.00 a barrel. Support is at USD 104.00 and then USD 101.50 a barrel.

WTI rallied 2.75% higher to USD 98.10 overnight after the crude inventory release, gaining another 0.40% to USD 98.50 in Asia. WTI has resistance at USD 99.00, the week’s highs, and then USD 100.00. The 200-day moving average (DMA) at USD 94.95 is nearby support, followed by USD 92.50 a barrel.

Gold rises on weak US dollar

Gold jumped 1.0% higher to USD 1734.50 overnight, boosted by heavy US dollar selling after the post-FOMC press conference. The charts continue to suggest that gold is trying to form a medium-term low; however, the price action remains underwhelming, even after the rally overnight. A softer US dollar today and tomorrow could spur more US dollar selling and lift gold higher, however.

Gold needs to overcome heavy resistance at the USD 1745.00 an ounce triple top before the gold bugs can really start to get excited. ​ It has support at USD 1700.00 and USD 1680.00, and then the longer-term support around USD 1675.00 an ounce zone. A sustained failure of USD 1675.00 will signal a much deeper move lower targeting the USD 1450.00 to USD 1500.00 an ounce regions.

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