Gold edges higher, oil consolidates

Oil consolidates recent price gains

Oil markets traded sideways overnight, as an unexpected rise in US Crude Inventories was offset by the Trump stimulus tweets and the threat of Hurricane Delta affecting US oil production. The recent oil rally is probably dependent on whether Hurricane Delta, currently a category-1 storm, strengthens as forecast to a category-3 storm. If Delta stays weak, the oil rally could quickly run out of steam. Poor Initial and Continuing Job Claims data from the US later today could muddy the US consumption picture and additionally, cap price gains.

Brent crude edged 0.50% higher to USD42.15 a barrel with critical levels to monitor being support at USD41.30 a barrel, and resistance at USD43.55 and USD43.15 a barrel. That being its 200 and 50-DMAs respectively. WTI rose 0.60% to USD40.00 a barrel overnight. Support lies at USD39.10 a barrel and then USD38.70 a barrel, its 200-DMA. Resistance is USD40.80 a barrel, its 50-DMA, followed by USD41.50 a barrel. If Hurricane Delta weakens, WTI is to most vulnerable to an extended price fall.

With mainland China away until tomorrow, Asian trading ranges continue to remain compressed. Oil is almost unchanged in Asia today.

Gold stages feeble rally on Trump stimulus hopes

Gold rose modestly overnight as the US dollar fell and equities raced higher on Trump’s stimulus tweets. Perhaps reflecting the reality, as opposed to the hopes of President Trump, gold rose only 0.50% to USD1888.00 an ounce. Gold’s penchant to mirror stock market falls in totality, but its reluctance to mirror rallies is a concern. It suggests that sentiment has been eroded in gold, and we cannot rule out further, potentially extended losses, if the equity rally changes course once again.

Gold has initial support at USD1872.00 an ounce, the overnight low. The 100-DMA follows that at $1860.00 an ounce, and then the double bottom at USD1848.50 an ounce. A loss of the latter signals a deeper correction targeting USD1800.00 an ounce initially. Gold has interim resistance at USD1898.00 an ounce, the overnight high. That is followed by formidable resistance at USD1920.00 an ounce, and then USD1940.50 an ounce, trendline resistance and the 50-DMA.

Gold is almost unchanged in Asia, reflecting the absence of China which has muted volumes in the region this week. Gold moves are driven by the evolution of the election and stimulus prospects in the US, and as such, gold will likely range narrowly until New York arrives.