Brent Crude eyed on seven-year-high, Gold price pressured by key resistance

Crude Oil

The prospect for the continuing global supply constraints pushed the crude oil price to soar higher, despite that the Omicron variant has slowed down the economic activities in almost every corner of the planet.

Since the beginning of 2022, Brent Crude has climbed up 9.2%, while WTI has gained 10.09% so far. This week, Brent Crude price has moved beyond the ceiling level for the past 12 months recorded on Oct 25th and reached as high as $87.07. WTI is also inches away from October high at $84.62 by the time of writing.

From a technical standpoint, a straight upward trendline has clearly demonstrated the strong momentum for the oil price at the moment. After bottoming out from the w shape, Brent Crude has skyrocketed to the record price since 2018. If the Brent crude keeps moving further, the next record in view will trace back to 2014, around $87.4. However, the technical also suggests a pull-back might be on the horizon in the near term as the RSI indicator shows a tendency for highly overbought.

Oil price 10-years chart

^{Source: Tradingview}

Gold price hovered around key resistance

The gold price has been hovering around $1820 since last week. It looks like the precious metal is in a phase of consolidation and looking to break through the resistance level, which has been exercising its pressure from the end of last year.

The pullback for the Gold (XAU/USD) since December was primarily due to the robust US dollar fuelled by anticipating Fed’s tighter monetary policy. However, last Friday's softer US Retail Sales and this week's rate cut by PBOC may probe market participants to rethink the US’s accelerated rate-hike plans and the real picture of inflation crisis.

The cooling of momentum can also be observed from the technical chart: RSI has been flattening around 50-60 level with the trading volume shrinking after maintaining at a flat level.

Looking ahead, the upcoming news-light week is more likely to see investors acting in a cautious fashion at least before the FOMC meeting scheduled on 25th. Only a convincing break above $1,825 and a close in the $ 1,830's could negate the bearish outlook. Below the current level, the 20-days moving average, which sits around $1809 now, will provide strong support for the gold lovers.

^{Source: IG}

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