Oil rallies sharply
Oil prices rallied sharply overnight as markets continued to fret over tight US galena and diesel supplies ahead of the summer driving season. News that President Biden is investigating restarting mothballed US refineries had zero impact on markets. That is not surprising as refineries, like aircraft parked in the desert, don’t have a simple on/off switch. News is also emerging that suggests OPEC+ will only raise production next week by the previously agreed 432,000 bpd, providing another supportive factor in a tight market. The street may also be pricing in peak virus in China with Shanghai’s port back to 95% of normal operations.
Gold trades sideways
Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It finished 0.13% lower at USD 1851.00 an ounce. In Asia, some pre-weekend risk hedging has lifted it slightly higher to USD 1854.00 an ounce. Most concerning about the overnight price action by gold, was that despite a broadly weaker US dollar seen elsewhere, and the rally in risk asset positioning overnight, gold actually finished the session lower. Its inability to rally on US dollar weakness is an ominous sign and risks are increasing for a serious downside washout of long positions.
Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance at USD 1860.00, USD 1870.00, and USD 1886.00 an ounce, its 100-day moving average.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.