Oil rallies, gold falls below 1800

Oil eyeing USD 60

The oil price rally just keeps on going. It appeared to have stalled this time last week but there’s much more optimism in the markets this week and that’s being reflected here. Larger inventory drawdowns and the determination of OPEC+ to rebalance the market rapidly, as per their comments this week following the monthly meeting, has further supported the recent moves.

With Brent now fast approaching USD60 a barrel, an incredible feat given events over the last 12 months, we’ll soon see whether it has the momentum to jump into a new price bracket. A move above USD60 is psychologically significant. And while OPEC+ may welcome prices continuing on this trajectory in the near-term, they will become increasingly wary about the re-emergence of US shale given the challenges it has posed in the past. With momentum not easing up at the moment, we may be talking about USD60 WTI soon, not just Brent.

Gold getting whacked by resurgent dollar and yields

It’s been a rotten week for gold. Higher yields and a stronger dollar after a big technical breakout has crushed the yellow metal, driving it back below USD1,800 for the first time since the start of December. The dollar broke above the neckline of an inverse head and shoulders and could see some reprieve in the near-term, supported by higher yields.

That could mean gold testing late November lows before too long, with USD1,750 and USD1,700 then being big tests below. The trend isn’t looking overly favourable for gold in the near-term but the dollar is expected to remain under pressure in the medium to long-term so it doesn’t necessarily spell the end for the precious metal.

Musk having fun with cryptos

Elon Musk is clearly having a lovely time, the self-proclaimed “destroyer of shorts” is using his Twitter influence to pump up crypto’s with Dogecoin his toy of choice at the moment. Whether that’s good for the space longer term is another thing but will anyone who held it before this week really care?

Bitcoin reaped similar benefits following its flirtation with the Tesla CEO and co-founder last week, although its surge was more modest by comparison and didn’t last very long. Perhaps the prospects of more of these antics from Musk is the latest bull signal for cryptocurrencies. Although his foray into Dogecoin may encourage speculators to turn their attention to other altcoins in the hope of even greater returns. Sounds healthy. Musk doesn’t appear to be getting bored though.

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
Craig Erlam

Latest posts by Craig Erlam (see all)