Gold explodes closing in on $2000 as WTI goes in the opposite direction
A massive rise from Gold last week as concerns about the global banking system increased the demand for safe assets. In addition the possibility of no interest rate rise at this week`s US Federal Reserve meeting is bullish for gold. Prices easily cleared 2023`s highs on Friday as panic buying entered the market.
While Gold is extremely overbought in the short term the problems in the banking sector are significant and in extraordinary conditions Gold is very popular. The results of the Credit Suisse and UBS talks regarding a potential buyout will result in a volatile start to the week. Initially a buyout could result in Gold falling but the market will likely start to look for the next bank in trouble which is positive for Gold.
Now Gold is so close to $2000 the buyers are to remain confident and try to push prices higher this week. Given the large rise last week expect some profit taking selling though so rather than expecting a large move this, expect prices to move sideways in a wide range this week.
Resistance: 1990, 2000, 2070
Support: 1960, 1918, 1900, 1890, 1870, 1830
WTI suffered badly last week breaking support at $72.50 and then $70.00 as worried about the banking crisis hurting oil demand. In addition the US government using their oil reserves adding supply to the market is negative for the market.
Much of the selling last week was from technical traders who are trading the downtrend once WTI broke support. This week sentiment in the banking sector will continue to dictate short term movement in the WTI price.
Despite WTI having broken support, further large losses seem unlikely this week. In the short term sideways to higher prices is most likely scenario this week.
Resistance: 70.00, 71.50, 72.50, 75.00, 80.50, 82.50
Support: 65.00, 62.00, 57.00, 50.00