Crude Oil Prices Near Monthly High Before OPEC Supply Cut
- Crude oil prices near monthly highs before OPEC output cut
- Gold prices mark time as news-flow driving Fed bets dries up
- Knee-jerk volatility remains a worry in illiquid holiday trade
Crude oil prices continued to hover near December highs ahead of implementation of OPEC’s output cut scheme next month. The cartel’s Secretary General Mohammed Barkindo said the monitoring committee meant to enforce compliance with the accord will convene on January 13. Gold prices remained confined to a narrow range amid a lull in news-flow driving speculation about Fed monetary policy for the year ahead.
Another quiet day on the European data front and a small helping of US news-flow seem like ingredients for continued standstill. As noted previously however, illiquidity can have a potent amplifying effect on otherwise modest price swings. This means that an unexpected headline may drive significant volatility in thin, holiday trade. Indeed, yesterday’s Euro and British Pound selloff seems to be a case in point.
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GOLD TECHNICAL ANALYSIS – Gold prices continue to oscillate in a now-familiar range above the $1100/oz figure. The first layer of support is at 1120.72, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis paving the way for a test of the 50% level at 1099.91. Alternatively, push above the 23.6% Fib at 1146.47 sees the next upside barrier at 1162.35, the 14.6% expansion.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to hover near December’s swing top. Near-term resistance in the 54.66-55.15 area (38.2% Fibonacci expansion, trend line), with a break above that on a daily closing basis exposing the 50% level at 56.11. Alternatively, a reversal back below horizontal pivot support at 51.91 opens the door for a challenge of the 38.2% Fib retracement at 49.80.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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