Gold consolidates gains near $1750 from the highest since October 2012, Oil prices plunged again
Justin Zhou| Analyst | CPT Markets|Wednesday, 15th April 2020
Market Review
On April 14, the U.S. dollar index hit a two-week low of 98.83, and the willingness to take risks returned to the market, prompting traders to abandon the highly liquid US dollar safety net and switch to a higher-risk currency; gold prices continued to soar, with spot gold soaring nearly 2% at one time, refreshing its high since November 2012 to 1747.36 U.S. dollars / ounce, but the closing price fell more than 20 U.S. dollars from the daily high. Oil prices fell sharply, and the US oil market once again lost the $20 mark, the deepest decline of nearly 11%, because of market concerns that the record production cut agreement is difficult to offset the collapse of demand.
Fundamental Analysis
Recently, after the market gradually stabilized, the early dollar buying was gradually sold off, resulting in a continuous decline of the dollar. Liquidity shifted to gold with higher risk aversion and stronger hedging function. Gold price is favored by investors in the context of global quantitative easing, and continuous buying pushes up gold price. In terms of crude oil, the benefits of short-term production cut have been digested, because the global economic restart has been delayed. Crude oil demand is still the main concern of the market, causing the oil price to fall again.
Technical Analysis — Gold
Gold soared again on Tuesday, surging 2% at 1700 to a new high of $1747.36 an ounce since November 2012. After the panic asset sale in March, investors flocked to the gold market to hedge against risks due to the stability of market risk sentiment and the introduction of large-scale stimulus plan triggered by central banks. Gold has also become the best choice for underwater investors in the global recession. In the short term, such positive effects continue to ferment, while the continuous increase in gold holdings has not yet shown signs of profit taking and fleeing.
In terms of technical pattern, gold price opened the upper space after breaking through 1700 this week. The upper gold price may be suppressed at the 1750,1780 and 1800 integer level. However, the current K-line trend shows that the bulls are still relatively complete, and the upward trend line also supports the strong trend of gold prices. Yesterday evening, the high of nearly $ 20 fell back most likely to be the adjustment after the rush, and such adjustment may continue to around 1710. However, the long trend of gold price remained unchanged in the long cycle before it fell below 1700.
Support: 1710,1700
Pressure: 1750,1780
Technical Analysis — Crude oil
Yesterday, oil prices plunged again, and crude oil prices are currently trading near $ 27.20. Recently, investors bet that the new record production cut agreement reached by global oil producing countries will not offset the damage of fuel demand caused by the new crown epidemic. The news of the earlier production cuts has been digested, and oil prices are again under pressure. In terms of fundamentals, oil prices are still some distance away from the rebound in the short term, but it is unlikely to fall below the previous low again. Because although the fundamentals are not optimistic, the support of low buying still exists.
Technically, the oil price’s lowering again in the short term is a secondary bottoming out process. There is a tendency for the oil price to fluctuate before the fall. Today, we need to pay close attention to the support of yesterday’s low near 26.5. If this price is broken, then it will continue or continue to fall yesterday and continue to expand. But if the rally can be opened above yesterday’s low today, the possibility of a bearish pullback increases.
Pressure: 8.0, 29.5
Support: 26.5, 25.0
