Oil powers higher, gold its USD 2000

[forex4you]

Oil powers higher, gold its USD 2000

Oil prices, I don't know what to say......

Panic has been seen again in oil markets in Asia today, with Brent crude spiking to nearly USD 140 on the open before settling at USD 128.00 a barrel. A combination of toxic factors over the weekend has combined to induce more panic buying in Asia. The US is apparently preparing to ban n oil exports, President Putin showed no signs of softening his e stance as the war proceeds onwards, and finally,  made last-minute demands of the US over the Iran nuclear deal, jeopardising it and the return of Iranian oil to official markets.

 

Brent crude and WTI prices have risen by around 7.0% anyway on Friday leaving markets on edge this morning. The weekend developments saw panic hit oil markets at the open as I mentioned, and at the time of writing, Brent crude is 8.50% higher at USD 128.00 a barrel and WTI is 7.90% higher at USD 124.00 a barrel.

 

With oil buying at such extremes, both contracts have the potential to stage aggressive corrections lower at the first glimmer of some good news, no matter how tenuous. Brent crude has a gap on the charts today and thus, could potentially correct back to USD 120.00 a barrel, dragging WTI back to USD 117.00 a barrel.

 

Having met my stretch price target of USD 130.00 a barrel, I am unsure where Brent crude goes from here. All I know is that high prices are here to stay and that the oligarchs of Londongrad will probably be replaced once again, by spoiled brats from the Middle East drag racing expensive European hypercars through the streets of Knightsbridge. Harrods will be the winner.

 

If pushed, I would say that Brent crude will potentially trade in a USD 120.00 to USD 130.00 a barrel range now, and WTI between USD 116.00 and USD 126.00 a barrel.

 

Gold is loving stagflation

Gold managed to nibble at USD 2000.00 an ounce this morning, rising with oil on stagflation fears after weekend developments. It has since backed off that level as oil prices moved lower but remains 0.85% higher at USD 1987.50 an ounce. On Friday, gold enjoyed another powerful session as investors loaded up on weekend risk hedging, rising 1.80% to USD 1970.00 an ounce.

 

There is likely to be plenty of barrier option-related selling around the USD 2000.00 region initially, making gains challenging initially. Additionally, gold appears to be following oil prices today, so if oil corrects lower again, the fast-money longs are likely to quickly retreat.

 

Although gold has burnt many a bullish trader intraday of late (including the author), its price action remains underlyingly contractive. The present situation in the world is as good a bullish case for gold as I can recall in a long time. Once USD 2000.00 an ounce is cleared, the path to USD 2100.00 will be laid open. Intraday support lies at USD 1970.00 and USD 1940.00 an ounce.

Source: Oil powers higher, gold its USD 2000