Gold extends losses, oil pares gains

Time for some profit taking in oil?

Dollar strength could be quite the headwind for commodity markets which have been red hot recently.

The vaccine news has turbo-charged the rally and oil has had an extra kick from the actions of OPEC+. With so much good news priced in and near-term risks piling up, it wouldn’t be surprising to see some profit taking kick in.

That’s not to say I think oil prices will fall heavily, not with the OPEC+ backstop in place. But after a phenomenal run in recent months, we may see it pull back a little.

Even still, crude will remain in very healthy territory, safe in the knowledge that should the situation require it, the group will act to support the market in the near-term and the vaccines in the longer.

Gold falls hard once again

After such a bright start to the year, gold has experienced a mass exodus, traders abandoning ship as yields rose and the dollar bounced back.

Just as the yellow metal was gathering some momentum, it reversed course sharply, smashing through $1,900 once more in spectacular fashion.

Gold found some support around $1,820 but continues to look vulnerable after such heavy selling. It could be a pivotal week for gold, with so much Fed speak in the coming days.

Should policy makers opt against talking down the rising yields, or just fail to convince, gold could be in for more tough days, with the late November lows potentially in sight.

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
Craig Erlam

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