Oil Rises Overnight, Gold Remains Steady

Oil prices rallied strongly overnight in energy commodities as hurricanes threatened again to disrupt US supplies and refining. Brent crude gained 2.50% to USD40.65 a barrel, and WTI gained 3.0% to USD38.40 a barrel.

Both contracts have continued to move higher in Asia. Brent rose to USD41.00 a barrel, and WTI rose to USD38.80 a barrel.

This rise is entirely hurricane-driven as none of the bearish fundamentals that have weighed down on oil has changed. To say the least, global supplies remain abundant, OPEC+ remains paralysed, and the future consumption outlook remains cloudy.

In commodity news, a weaker US dollar saw gold mount a feeble challenge to its technical resistance line. It was at USD1970.00 an ounce overnight.

However, the rally lacked momentum and quickly faded out. It retreated to finish almost unchanged at USD1954.00 an ounce.

That same resistance line has moved lower to USD1965.00 an ounce on Wednesday. Moreover, an uber-dovish FOMC should be positive for gold and could see it tested once again.

This commodity will likely remain contained within a USD1945.00 to USD1960.00 range ahead of the meeting decision though.

Gold’s longer-term bullish fundamentals remain firmly in place and  will be reinforced by the Federal Reserve this evening.

The precious metal’s support zone between USD1900.00 to v1920.00 has fended off all challenges since early August. It is looking to be the medium-term low for now.

The balance of probabilities indicates that gold’s next move will be a retest of the USD2000.00 an ounce region.


Factors Affecting the Yellow Metal

Other actors influencing the price of gold include the U.S. Democrats pushing to delay the U.S. Congress’ October recess. This is in order to establish a new COVID-19 aid bill. Furthermore, U.S. President Donald Trump declared that a COVID-19 vaccine would be ready in a few weeks. His pronouncement, though, was received with a certain amount of skepticism.

A WTO rules that the U.S. breached international trade regulations when applying tariffs to over $23B in Chinese goods. This has raised the possibility of increased U.S.-China trade tensions and bring further hesitation  into the global marketplace.

The U.S. presidential election and the uncertainties about its outcome are also matters of concern to investors.

The continued spread of COVID-19 globally is creating the usual currents of uncertainty in the commodities market. Though recent news on vaccine progression has slightly stilled the waters.

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