Gold Treads Water As Oil Wobbles
MarketPulse | Apr 19, 2017 06:45
Decreasing tensions in Asia sees gold drop, but a murky French election will keep buyers interested on dips.
Gold regained some of its losses overnight to open in Asia at 1288. The net effect, however, was further consolidation within its recent trading range. Gold has a weaker USD, in general, to thank for that, as Goldman Sach’s (NYSE:GS) earnings miss led the Dow Jones Index lower overnight.
The yellow metal appears to be consolidating near its recent highs before attempting a test of 1300. Safe haven buyers appear to be around on any meaningful dip as we run into Sunday’s French elections, where the potential result is cloudy, to say the least.
Gold has initial support at 1278.50 with resistance at 1296.00. Key support remains the 1260 region with 1300 above signalling a potential new up leg if broken. In the meantime, gold will continue to trade the nuance of the USD in the absence of any fresh geopolitical headlines.
The American Petroleum Institutes (API) Crude Stocks torpedoed oil late in the New York session, with a lower than expected draw down of 840,000 barrels. Both Brent and WTI fell through near-term support to trade down over one percent on the day.
Brent spot opened at 54.80 in Asia with WTI spot at 52.30. Brent has support nearby at 53.95, its 100-day moving average, with WTI’s 100-day moving average also nearby at 51.45.
Although Asia has seen some profit taking, a break of the New York lows could see more culling of recently built up long positions. All eyes will now turn to the official U.S. crude inventories report tonight, with an expected drawdown of -0.8 million barrels. Another undershoot here almost certainly setting up oil for a deeper correction.
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