USD profit taking eases pressure on gold and oil

$40 a happy compromise for oil

Oil prices are continuing to hover around the $40 mark after finally catching a bid on Monday, with the dollar weakness giving the broader commodity market a lift.

It continues to face resistance to the upside though, for good reason. The evolving Covid landscape is a massive downside risk for crude prices but downside risks are probably being alleviated by the readiness of OPEC+ to cut more if needed. That may be put to the test in the coming months but for now, $40 looks a happy compromise.

Dollar enjoying rebound but may not last

Profit taking in the dollar is providing some relief for gold, as it climbs off its lows and sets its sights on $1,900.

It could face stiff resistance here though, with it having been a floor throughout August and the early part of September, broadly speaking. It’s a big week for the dollar – Presidential election, jobs report, etc – so we could see some big swings in the coming days.

I don’t think the correction is finished though and this bit of profit taking we’re seeing may not last. If that’s turns out to be the case, there could be plenty more downside to come.

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