Oil rallies but gold is directionless

OPEC+ talks up oil prices

Oil prices rallied strongly yet again overnight, with Brent crude up almost 9.0% from its lows for the week. Overnight, the OPEC+ monitoring committee reiterated their commitment to maintaining production-cut discipline and threatened form action for recalcitrant members of the grouping.

Adverse weather events also helped the price rises in America’s oil-producing and refining South. Although Hurricane Sally has passed, it has left behind extensive flooding, and more tropical depressions are forecast to be on their way. That should keep a weather floor under WTI prices in the near-term.

Brent crude rose 2.30% to USD43.30 a barrel overnight, with WTI climbing through its 200-DMA, increasing 2.0% to USD40.90 a barrel. Brent crude will find resistance at its 50-DMA at USD43.70 a barrel, with support at USD41.60, its overnight low. WTI is testing resistance at its 50-DMA today at USD41.10 a barrel, with support now at its 200-DMA at USD40.20 a barrel. Further resistance is at USD42.00 a barrel.

With both Brent and WTI nearly 10% higher over the week, the best of the supportive news is likely now baked into spot prices. Further substantial gains from these levels will be harder going. The fundamentals weighing on prices, falling consumption outlooks, an excess or immediate supply, and the end of the US driving season remain unchanged and should reassert themselves at these levels.

Gold remains in no man’s land

Gold faded in overnight trading, falling by 0.80% to USD1944.00 an ounce. Like currency and equity markets, gold traders appear to have gone into the FOMC meeting long, and we are continuing to see a reduction in speculative long positioning.

Gold has risen with equities in Asia, climbing 0.40% to USD1951.50 an ounce, but in the bigger picture, remains rangebound between USD1920.00 an ounce, and USD1973.00 an ounce. We expect this state of affairs to continue into the weekend, with the gold off investors’ radars for now, and speculative interest reduced. A further period of consolidation looks likely into next week.