subject: Speculating On The Oil And Gold Markets [print this page] Gold has seen some large fluctuations recently including the odd day where there has been a $25 dollar swing.
There is still the strong price resistance around $1160-$1162 and this will probably come into play in the near term as it was the failure to close above here in mid-April that helped push the price back to the $1122-$1124 area.
The bulls do still have the overall long term momentum and the medium term trend from 2008 has held very well on the two tests so far this year. This trend line is currently at $1111 and rising.
At the moment, a popular trade for short term investors is selling at around the $1157-$1160 range. Although in the trades that I can see, these investors are adding Stop Loss orders to their positions at around $1162.
Oil Trading
Crude oil is causing some concerns as it returns to the higher price levels. The attempt to break back under $82 per barrel failed last week and the reaction can be seen as oil trades around the $85 mark.
With the economies of the world slowly climbing out of the mire, demand is hardly likely to decrease in the short to medium term even though new technology is making every gallon go further and further. It would appear that ever more of the cash wealth of the world will divert to the Middle East, South America and the commodity producing nations.
So price support remains at $82 to $83 and there is a resistance to any prices higher than $87. Technically that is a wide range for oil but it has proved very capable of regularly trading within this kind of range.
The real interest remains the Brent Crude Oil v US Crude Oil spread, also known as the Crack Spread. On average US Crude trades around $1 higher than Brent Crude Oil. At the moment Brent Crude Oil is trading $2 to $3 higher than its US counterpart.
In the past this price difference has proved too much to breach and it has tempted a lot of traders looking to sell Brent Crude. One of the simpler ways of trading this market is through a spread betting account where you can speculate on both the US Oil and Brent Crude Oil futures markets. In fact, you can normally also trade gold and forex markets from the same account.
Although note a word of caution from Simon Denham of Tradefair, on this occasion we are seeing heavy positioning from more than the usual suspectsif this is being mirrored across the financial landscape there may well be a squeeze [on sellers] about to take place. Do not be surprised if, for once, there is a sudden widening of the crack spread.
Before you trade note that with spread betting you can lose more than your initial investment. As such, please ensure that spread betting matches your investment objectives. Spread bets carry a high level of risk to your capital. Make sure you familiarise yourself with the risks. Seek independent advice where necessary.
