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Hansen: How I'm trading oil and gold

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Oil markets have finally begun to stabilise after their recent price slump. Saxo’s Ole Hansen says that despite continuing over supply, sentiment was helped by the news that Saudi Arabia cut production by 350,000 barrels in September. Inventories in the US, however, rose again for the second week running. Hansen says that production in the US is now at the same level as it was in the 1980s. He says he prefers to look at WTI from the short side and recommends selling into strength or on a break below 80 USD/bbl.

The recovery in global stock markets has meant that gold has lost its shine this week. After finding resistance at USD 1255 the price drifted back to USD 1230. Hansen recommends buying gold ahead of support at USD 1219/oz.

However he says things could get much more volatile ahead of the so-called ‘gold’ referendum being held in Switzerland next month. If it’s a ‘Yes’ vote, the Swiss National Bank would have to increase its gold holdings from 8% to 20%.

Silver meanwhile is “holding up fairly well against this weakness in gold,” notes Hansen. He says that earlier in the week the precious metal was trading at its weakest level in 5 years but it bounced back.