Oil steadies, gold’s woes continues

Oil steadies as OPEC+ prepares to get discussions underway

Oil prices are sitting a little off their highs on Friday following another impressive week that saw them hit their highest levels since March. With OPEC+ due to meet next week, traders may now take a more cautious approach as they await the group’s decision on whether to persevere with planned increases in January or delay them in light of the restrictions we’re once again seeing in response to the severe winter spread of Covid-19.

The decision may have been straightforward prior to the vaccine news. Crude was trading back around USD35 and the trend wasn’t favourable. But that has all changed now. Will producers be tempted to push ahead as planned and hope that the vaccine buffer will keep prices stable above USD40?

Some members will hold online talks over the weekend ahead of next week’s meeting which could lay the foundations for how the discussions proceed. Obviously, producers don’t want a repeat of earlier this year when an oil price war compounded the issue of the pandemic and caused a historic plunge in prices. All of this will become clearer but for now, we may just see a little consolidation, maybe even profit-taking, around these highs.

 

Gold struggle goes on

Gold is really struggling to pick itself up and dust itself off after taking quite a beating in recent weeks. The yellow metal has been among the biggest losers of the vaccine news, crashing below USD1,850 earlier this week, where it has found strong support for the majority of the summer.

It’s now wallowing in self-pity around USD1,800 and while the timing of the Thanksgiving bank holiday may have been kind to it, gold looks vulnerable to another tumble. Despite falling more than 8% in just under three weeks, the path of least resistance still looks to be below. I know an 8% drop would just be a normal move in something like bitcoin, but in a stable investment like gold, it’s a fairly significant drop.

 

Bitcoin tumble small compared to the last month’s gains

Speaking of bitcoin, it’s down around 2% at the time of writing. No doubt that will have changed by the time I hit send, but what can I do. The cryptocurrency fell a little under 10% yesterday, a move that doesn’t even trigger the batting of an eyelid when you’re talking about bitcoin or any of its peers, for that matter. It’s shedding another couple of percent today but all of this pales in insignificance compared with the more than 60% rally since the Paypal announcement last month.

This instrument remains as volatile and highly speculative as ever. Not that this will in any way act as a deterrent. People know what they’re getting themselves in for when it comes to cryptocurrencies. They thrive on hype and when they eventually fall, they do it in spectacular fashion. There may be more reasons to be bullish on cryptos than there were three years ago but some things simply haven’t changed. The wild ride continues.

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 SKY News. 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