Oil steady after storms, gold flat

Oil steady as tropical storms hammer US Gulf Coast

Oil prices are a little flat on Tuesday but crude continues to trade near the upper end of its recent range.

With the Gulf coast being hit with two tropical storms this week, it may come as a surprise that oil prices haven’t jumped a little more as they would have in the past but the situation is very different now. Marco’s downgrade may be a factor but with Laura potentially being upgraded, we may have historically seen a bigger impact.

The difference this time is that we are in the midst of a pandemic, one that has played havoc with the oil industry and forced huge production cuts as inventories have swelled. This is not a balanced market or one running a deficit, there is ample supply so any shortfall here is unlikely to cause any problems.

The result is muted trading in oil as attention remains on the far more important factors, like a vaccine.

Gold flat after Monday’s reversal

Gold is a little flat on the day after giving up early gains on Monday to end the session in the red. The continued fightback in the dollar amid higher yields ruined the momentum for gold last week, just as it was making a comeback.

A little reversal yesterday once again sucked the life out of the yellow metal and left it trading around USD1930, still lofty levels historically but some way of the highs earlier this month.

The dollar has retraced around two-thirds of the losses it sustained a couple of weeks ago as it plunged below key support, which could make the coming days really interesting for the greenback, and in turn gold.

Should the dollar now turn lower, it may suggest last week’s rally was nothing more than a corrective move in a broader downturn and give gold renewed momentum. On the flip side, a break above 94 in the dollar index could spell trouble for the yellow metal.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam