US hurricane boosts oil, gold remains steady
|Oil rises overnight, but don’t be fooled
Oil prices rallied strongly overnight as hurricanes threatened to, yet again, disrupt US supplies and refining. Brent crude rose 2.50% to USD40.65 a barrel, and WTI rose 3.0% to USD38.40 a barrel. Both contracts have continued squeezing higher in Asia, Brent rising to USD41.00 a barrel, and WTI rising to USD38.80 a barrel.
The reason for the rise in oil prices is entirely hurricane-driven. None of the bearish fundamentals that have weighed down on oil has changed. Global supplies remain abundant, OPEC+ remains paralysed in wait and hope mode, and the future consumption outlook remains cloudy, to say the least.
If the most recent hurricane passes in America’s South without incident, or with minor damage to oil infrastructure, those fundamentals will almost certainly reassert themselves. The price rally overnight looks like one to be sold, and not one to coat tail.
Gold fails at resistance yet again
A weaker US dollar saw gold mount a feeble challenge to its technical resistance line at USD1970.00 an ounce overnight. However, the rally lacked momentum and quickly petered out, with gold retreating to finish almost unchanged at USD1954.00 an ounce.
That same resistance line has moved lower to USD1965.00 an ounce today, and an uber-dovish FOMC should be positive for gold and could see it tested once again. Ahead of the meeting decision though, gold is likely to remain contained within a USD1945.00 to USD1960.00 range.
Gold’s longer-term bullish fundamentals remain firmly in place, and barring a surprise, will be reinforced by the Federal Reserve this evening. Gold’s support zone between USD1900.00 to v1920.00 has fended off all challenges since early August and looks to be the medium-term low for now. The balance of probabilities suggests that gold’s next move will be a retest of the USD2000.00 an ounce region.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.