Gold and silver retrace slightly, oil finishes higher

Gold Technical analysis, overview, strategies, and levels

Gold prices tend to move opposite equities given the former's a safe haven asset and the latter a riskier one (last Friday’s exceptional move aside which may have had more to do with position covering than risk-related flows), and the latest move out of the US Federal Reserve (Fed) to cut rates followed by a BoC (Bank of Canada) rate cut yesterday combined with fiscal easing to combat the coronavirus has aided equities yesterday in a classic risk-on move. Whether those moves can stick however remains to be seen, and that’s not to say it won’t aid gold prices in the long-term should central bank easing continue or increase as money markets continue to price in further rate cuts out of not just the Fed, but also the ECB. US NFP (Non-Farm Payrolls) will be released tomorrow, likely to induce more volatility in an already volatile market.

IG client^* and CoT sentiment for Gold

Gold chart with retail and institutional sentiment

Silver Technical analysis, overview, strategies, and levels

As with gold, silver prices were in for a slight retreat yesterday in a session that was in clear to contrast to previous volatile sessions, with the US dollar a relative outperformer in the FX market against the remaining FX majors but not by much. The lack of change in the prices of both precious metals translated into little change in the gold/silver ratio, which remains near record highs in the 95s and no doubt testing spread traders who have shorted it anticipated silver prices to outperform – which it hasn’t yet.

IG client^* and CoT sentiment for Silver

Retail bias remains in extreme long territories at 93%, down a notch from yesterday.

Silver chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

The focus yesterday wasn’t just on risk-related flows, but also EIA’s (Energy Information Administration) oil inventories estimate which registered a slight surplus of 0.8M that was below 2.8M expectations and below that of API’s (American Petroleum Institute) estimate of a 1.7M increase the night before. All eyes now turn to OPEC+ meetings today and tomorrow to see whether they’ll reduce output further than expected given the effects of the coronavirus on demand for the energy commodity. The Wall Street Journal has reported that Russia is opposed to Saudi plans of making drastic production cuts in oil, and hence oil price movement might start to match that of its current technical overview, else give way to contrarian strategies instead.

Learn more about oil trading.

IG client^* and CoT sentiment for Oil WTI

Going into the OPEC+ meetings both retail and CoT (Commitment of Traders) speculators are holding an identical 81% extreme long bias.

Oil WTI chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am.

Be sure to request IG’s Weekly & Daily Market Report when you open an account with IG Dubai and get access to the full information on the FX majors, commodities, indices, and Bitcoin.