Oil eyes OPEC+, gold falls below 1700

Oil markets await OPEC+ tomorrow

Oil markets retreated overnight as they digested the Suez Canal reopening and continued US dollar strength. Brent crude fell 1.85% to USD63.95 a barrel, and WTI fell 2.30% to USD63.40 a barrel. The falls overnight appear to have flushed some Asian buyers out of hiding ahead of OPEC+ tomorrow, both contracts rising 40 cents a barrel this morning.

Although oil fell overnight, in the context of the recent wild swings and ranges, the actual falls looked more corrective than a change in sentiment. Despite the noise, oil markets are consolidating at the top of their last week’s ranges ahead of the OPEC+ decision on production targets tomorrow.

Not wishing to be caught out like last month, oil markets will not go into the meeting short, and I expect any dips today to be met with firm demand. An unchanged OPEC+ is now the mainstream view and also mine. There is a chance that this could be a buy the rumour and sell the fact situation, with oil falling after the OPEC+ decision. Still, I do not expect the lows of last week on either contract to be revisited, with the Biden package to come and US jobs data expected to confirm its accelerating recovery.

Brent crude has support at USD63.40 and USD60.00 a barrel, with resistance just above at USD65.40, followed by USD66.50 a barrel. WTI has support at USD59.25 and USD57.20 a barrel, with resistance at USD62.20 and USD63.20 a barrel.

Gold in danger of breaking gold-bugs hearts

Gold fell ominously overnight, retreating in the face of rising yields initially and then capitulating before a rampantly stronger US dollar. Gold fell by 27 dollars, or 1.60%, to USD1684.80 an ounce, with stop-loss selling seemingly prevalent as support at USD1700.00 an ounce capitulated. Gold has found no friends in Asia either, falling another 0.30% to USD1679.60 today.

Gold’s multi-week attempt to trace a longer-term bottom in prices between the 50.0% and 61.80% Fibonacci’s is now in grave danger. The fall through support at USD1700.00, and particularly, the 61.80% Fibonacci level at USD1785.00 are strong bearish signals. A further rise in US yields tonight, or more US dollar strength, will likely deal the coup de grace to the nascent gold recovery, and set the scene for a rapid fall targeting the USD1600.00 an ounce region.

Gold’s last support is just below at USD1677.00 an ounce, the March 8th low. After that, the gate opens to USD1600.00 an ounce. Resistance is at USD1700.00 an ounce and USD1720.00 an ounce.

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