Oil flat, gold under pressure

Oil barely changed in Asia

Oil prices barely moved overnight with trading curtailed by the US public holiday. Like other asset classes, oil has received a gentle US stimulus tailwind in Asia, with both Brent and WTI futures moving modestly higher. Brent crude has risen 0.55% to USD55.00 a barrel, and WTI has risen 0.40% to USD52.25 a barrel.

Further dollar strength could extend oil’s correction lower—the USD53.00 a barrel level being a critical pivot level for Brent crude. WTI’s support is nearer, at USD51.50 a barrel although only a loss of USD49.30 calls the overall rally into concern. Longs could continue to be trimmed into the Biden inauguration and the expected flurry of executive orders shortly after.

In Asia today, though, the massive rise in natural gas prices should ensure that oil finds plenty of willing buyers on any dips.

Gold survives intra-day sell-off

Gold spiked lower by USD26 to USD1803.00 at one point yesterday, before regaining its poise and rising rapidly to close at USD1838.00 an ounce, a 0.50% gain for the day. Like currency markets, the price action was reminiscent of stop-loss selling being triggered in a US holiday-thinned market.

Gold has now fallen through its 200-DMA at USD1843.00 an ounce, and this level will be an intra-day pivot in the days to come with initial resistance at USD1860 an ounce, its 50-DMA, USD1865.00 an ounce and then the 100-DMA at USD1886.50 an ounce. Having crashed through support at USD1817.00 an ounce overnight, support now becomes the overnight low at USD1803.00 an ounce. The critical level for the longer-term uptrend remains USD1760.00 an ounce.

Beleaguered bullish gold traders (including the author), can take heart at the overnight price action. The rapid recovery from the overnight lows suggests that plenty of buyers are clustered around the USD1800.00 region. The overnight recovery still leaves gold near the bottom end of its January range, and a rise in US yields, and/or dollar strength will test gold’s resolve.

With the US on holiday overnight, trading in Asia has been moribund, with gold unchanged at USD1838.00 an ounce.

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