Oil steady, gold knocking on USD1900 line

Oil firm on US crude inventories

US official Crude Inventories fell by a much larger than expected 6.50 million barrels overnight. Combined with a weaker US dollar and vaccine-driven recovery sentiment, that kept both Brent crude and WTI anchored to the top of their ranges. Brent crude rose 0.70% to USD51.90 a barrel, and WTI rose 0.45% to USD48.30 a barrel. With Asian markets in holiday-mode, oil prices are unchanged regionally today.

The Georgia senate elections take place on Tuesday, and the markets are projecting that the Republicans will pick up at least one of the two contested seats. In this scenario, the technical picture suggests that Brent crude is poised to break resistance at USD52.50 a barrel, extending gains to USD54.00 a barrel initially. Similarly, WTI seems set to rise through USD49.50 a barrel, targeting a move that could extend above USD54.00 a barrel in January. Only a fall by Brent through USD49.00 a barrel and WTI through USD46.00 a barrel suggest a rally delay.

Gold fails at its 100-day moving average

The fall by the US dollar overnight saw gold extend its rally, rising an impressive 0.86% to USD1894.50 an ounce. However, once again, it failed to break through its 100-day moving average at USD1896.00 an ounce. Failing at the third attempt in two-weeks appears to have provoked some position reduction amongst investors, with gold retreating 0.30% to USD1889.50 an ounce in thin Asian trading.

Nevertheless, gold remains close to its two-month highs and appears to be consolidating ahead of an expected break higher. Assuming the US dollar remains weak next week, and the Georgia senate runoff springs no surprises, gold should target USD1910.00 an ounce. Once cleared, the road lies open for further gains over the coming weeks to USD1975.00 an ounce. Support remains at USD1875.00 an ounce, followed by USD1855.00 an ounce.

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