Oil stable for now but downside pressure remains
Oil prices have stabilized in recent days, with WTI hovering around the $40 mark after coming under heavy pressure earlier this week.
Prices remain vulnerable despite the fact that they have settled as the week has progressed. The risks to the outlook remain to the downside due to the rising Covid numbers across Europe which could necessitate further action from OPEC+ before the end of the year.
It could be this that has prevented oil prices falling further this week, after Saudi Energy Minister Abdulaziz bin Salman last week warned against shorting oil.
Gold hits two month low
Gold hit a two month low today and remains under pressure as support for the dollar continues to grow.
The yellow metal clearly has not lost its correlation with risk, with the dollar continuing to be the preferred save haven during times of turbulence. If the next month is going to be a challenge for risk markets, the dollar could have more downside to come yet.
The next barrier to the downside is $1,800, which could provide some support in the near-term.
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
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