Downside risks remain for oil and gold

Oil sell-off highlights nervousness in economic outlook

Oil prices are a little lower on Wednesday, holding their losses from Tuesday when sharp selling kicked in around the open on Wall Street.

As many have repeatedly warned, the risks have remained to the downside for oil priced, with the economic outlook for the remainder of the year looking murkier by the day.

Yesterday we saw an example of the soft underbelly in the oil price recovery. The nervousness clearly showed as the sell-off gathered speed.

We’re obviously not heading back to the March/April scenario, OPEC+ will be determined to avoid anything like that, but rallies may continue to look a little weak.

Dollar rebound gives gold bulls hope

The rebound in the dollar this week has been supportive for gold, enabling it to rebound off the $1,850 level and cautiously head back towards $1,900.

This is where the real test will come. The dollar testing previous highs from above and gold testing prior major support from below. A break through $1,900 would undoubtedly give gold bulls hope but I’m not convinced. I think there may be a little more to go.

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