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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Oil drops on Saudi price cuts, gold and silver prices also under pressure

Outlook on Brent crude oil, gold and silver as Saudi Arabia reduces February official selling price for Asia.

Oil in hand image Source: Bloomberg

Brent crude oil takes hit on Saudi price cuts

Oil - Brent Crude fell by over 3% on Monday as Saudi Arabia announced a reduction in the February official selling price (OSP) of its primary Arab Light crude oil for Asia by $2 to $1.50 a barrel above the benchmark, its lowest level in 27 months. It did so amid increasing global supply, especially from non-OPEC producers, and dwindling demand.

The front month futures contract held above last week’s 74.81 low, though. Were it to give way, the 7 December low at 73.69 would likely represent the next downside target ahead of the 72.50 December low.

Resistance can now be spotted around Friday’s 77.60 low ahead of the October-to-January downtrend line at 79.22 and last week’s 79.35 high.

Brent Crude Oil Futures Daily Chart Source: ProRealTime
Brent Crude Oil Futures Daily Chart Source: ProRealTime

Gold price continues to slide

Spot Gold’s drop from its $2,088 per troy ounce late December high amid an appreciating US dollar has so far taken it to Monday’s $2,017 low from where it is trying to recover. Slightly further down support can be found along the 55-day simple moving average (SMA) at $2,014 and, more significantly, between the October and late November highs at $2,009 to $2,007.

Resistance above the breached October-to-January uptrend line, now because of inverse polarity a resistance line, at $2,038 can be spotted at Friday’s $2,064 high. While remaining below it, downside pressure should retain the upper hand.

Spot Gold Daily Chart Source: ProRealTime
Spot Gold Daily Chart Source: ProRealTime

Silver price hovers above support

Spot Silver (5000oz)’s descent from its late December per troy ounce high at $24.60 on the back of an appreciating US dollar took it to last week’s $22.84 low, above which it has been hovering since. Slightly below it remains the $22.51 December low which should act as support, were it to be retested. Further down sits the November low at $21.89.

Minor resistance above Tuesday’s $23.37 intraday high can be seen between Friday’s high and the 55- and 200-day simple moving averages (SMA) at $23.51 to $23.66. While this resistance area caps, downside pressure should continue to dominate.

Spot Silver Daily Chart Source: ProRealTime
Spot Silver Daily Chart Source: ProRealTime

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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