Oil up ahead of OPEC+, gold steady

Oil jumps ahead of OPEC+ decision

The regulatory approval of the Pfizer vaccine in the UK and prospect of more stimulus in the US may be helping to support oil prices today. Brent and WTI have both rebounded strongly and are once again pushing last weeks highs. Both saw strong technical support around their summer peaks and have since rallied strongly. Whether that can be sustained will depend on the outcome of tomorrow’s OPEC+ meeting.

Disagreement forced the group to push back Tuesday’s meeting until a solution could be found. It was previously expected that planned increases of two million barrels in January would be delayed but with prices having rallied strongly over the last month, some seemingly don’t see the need, given the risk of handing an advantage to US shale again.

Today’s rally may suggest expectations may have been pared back and traders may be comfortable with a more phased in approach. A lot of positivity is priced in at this point though so can’t write off the possibility of any announcement being a profit taking catalyst, barring a significant over delivery.

Gold enjoying some reprieve

Gold is continuing to see some reprieve after coming off its lows on Tuesday. The prospect of stimulus was one of the upside risks for the yellow metal and all the speculation is giving it a big lift. Whether Congress can deliver and gold can capitalize on it is another thing. There remains a major barrier above around USD1,850; a break above that could be a significant move, although significant near-term challenges remain.

The path of least resistance is still below in my view, in the near-term at least. Partly due to my lack of faith in Congress to deliver in any meaningful time or way. Longer term I don’t think golds flirtation with USD2,000 is over but I do think it may test its recent lows again first.

Bitcoin pausing ahead of USD20,000

Bitcoin hit another record high yesterday before paring back and its struggling to take another run so far today. This is a big psychological barrier, albeit one I fully expect it to overcome and probably very soon. Once it does, the hype around it could propel it much higher initially.

Should it fail to break those levels then it could be setting up for quite a punchy double top and treat us to the kind of correction we’ve seen in the past. I am not currently of the view that this will happen at this point, I still feel we’re in early bitcoin hype mode. Don’t get me wrong, it’s a case of when rather than if but I don’t think the when is now. Bitcoin always has surprises up its sleeve though. It’s what makes it such an interesting instrument to follow, albeit a highly speculative, volatile one.

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