Oil falls, gold vulnerable

Oil prices fall overnight

Brent crude and WTI had another session of 5.0% intraday ranges overnight, closing quite a bit lower than their opening levels. Global recession fears and the resumption of Russian gas flows to Europe seem to have been the catalyst, although I am sure that trading volatility recently is reducing liquidity as well, exacerbating movers. The futures markets remain deeply in backwardation, suggesting that prompt supplies are as tight as ever in the real world.

The leaders of Saudi Arabia and Russia had a phone call today, with Saudi Arabia affirming Russia’s importance to the OPEC+ group and further emphasising which side OPEC’s bread is buttered regarding US relations. Along with Saudi Arabia making noises about rapidly approaching production capabilities, that has sent oil prices higher in Asia today ahead of the weekend.

Brent crude closed 2.45% lower at USD 103.85 overnight, climbing 1.30% to USD 105.20 a barrel in Asia today. WTI closed 3.55% lower at USD 96.40 overnight, gaining 1.0% to USD 97.55 a barrel in Asia. Brent crude has well-denoted resistance at USD 108.00 a barrel on the charts and then USD 111.00. It has support at USD 104.00 and USD 101.00 a barrel. WTI traced a double bottom at USD 94.30, its overnight low and 200-day moving average (DMA). That makes this level quite pivotal now, a sustained failure signalling a retest of USD 90.00. Resistance is at USD 100.00, followed by USD 104.00 a barrel.

Gold remains on the long-term injured list

Gold traded in a wide USD 40.00 range overnight between USD 1680.00 and USD 1720.00, with the price action suggesting that some sell-at-worst long-liquidation occurred as USD 1700.00 failed. The longer-term support is around USD 1675.00 an ounce, barely holding but also emphasising its importance. In the end, a weaker US dollar and falling US yields allowed gold to record a decent gain for the day, although on the scale of recent moves in other asset classes, gold remains entrenched in the danger zone.

Gold finished 1.32% higher at USD 1719.00 overnight, easing 0.26% lower to USD 1715.00 an ounce in Asia today as US dollar strength resumed. ​ It has support now at 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, targeting the USD 1450.00 to USD 1500.00 an ounce regions. Gold has resistance nearby at USD 1720.00, then USD 1745.00, and now a triple top.

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