Oil under pressure, gold eyes Biden speech

Oil extends losses ahead of EIA data

Oil remains under pressure but holds above the key USD60.00 level ahead of tomorrow’s OPEC+ meeting. The broad expectation is that OPEC will keep production cuts in place, especially after the whipsaw action in oil prices over the past week. The large swings that characterised last week’s trading indicate oil is still extremely vulnerable to both bullish and bearish stimuli.

The fact API data revealed US crude stocks rose by 3.9 million barrels, well above forecasts, builds on expectations that OPEC+ will keep production curbs in place.

With Covid cases rising steeply and lockdowns tightening in Europe as well as key developing markets such as India and Brazil, the demand outlook for oil has clouded significantly. This is overshadowing the more upbeat trajectory from the US.

Attention will now turn to US inventories data from the US EIA ahead of tomorrow’s OPEC meeting.

Gold treads water ahead of Biden’s speech

This week is shaping up to be a tough week for gold. The precious metal tumbled through the key support at USD1700 in the previous session, ending the day with over 1.5% losses. This sell-off was an extension of Monday’s decline, with losses for the week already totalling more than 2.5%.

The US economy’s upbeat economic outlook combined with elevated treasury yields and a stronger US dollar has dragged on demand for the precious metal.

Data revealed that US consumer confidence surged to a one-year high in March, producing the sharpest one-month gain in almost 18 years. Overnight data from China also revealed faster-than-expected growth in factory activity. Today, gold is consolidating losses, finding some respite from the weaker US dollar and holding steady ahead of Biden’s speech and tomorrow’s non-farm payroll report. The slight negative tone to equity markets could offer some support to downtrodden gold.

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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.