Gold slips, oil rises ahead of OPEC+

Gold resumes its sell-off

Gold bears are once again in the driving seat after a brief respite on Tuesday. Retreating bond yields pulled the US dollar back, lifting the precious metal. However, Tuesday’s move higher lacked follow-through. With bond yields now stabilising, the focus is shifting back to the Biden administration’s massive fiscal spending plan, a rapid vaccine rollout and optimism surrounding a speedy economic recovery: an upbeat mood that is conducive to falling safe-haven demand.

The precious metal is looking vulnerable around USD1720 after hitting fresh multi-month lows overnight. The near-term bias is bearish with any moves higher considered selling opportunities. With the ADP payroll report, service sector PMI data, a speech by Fed Chair Powell and the NFP all lined up over the coming days, volatility could pick up in the precious metal. The bears will look for a move below USD1707 towards USD1670. Meanwhile, a move above USD1725 could negate the near-term bearish trend.

Oil rises on OPEC+ whispers

After a steep sell-off at the start of the week, oil prices have jumped back over USD60 ahead of tomorrow’s OPEC meeting. The rumour mills are in full swing as reports surface that several OPEC+ members are in favour of keeping output levels unchanged. Oil had sold off steeply at the start of the week based on expectations that production cuts would be eased and more oil released back into the markets. With an output cut now in question, the bulls are seizing control, bringing USD63.50 back into focus.

To ease or not to ease? With the demand outlook improving, the potential for conflict between OPEC+ members is on the rise. Any signs of such conflict could quickly inject jitters into the oil market in light of last year’s Russia Saudi Arabia standoff.

WTI has pushed back over its 20 SMA on the daily chart. A move above USD62.20 would see the price re-enter the ascending channel dating back to early February. Immediate support is seen at USD60.00, a psychological level, ahead of USD59.30, today’s low.

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Sophie Griffiths
Sophie Griffiths is a market analyst with OANDA, focusing on the UK and Europe. With almost 15 years of experience, she brings with her a deep-seated understanding of the financial markets, providing timely and relevant fundamental analysis across a broad range of asset classes.