Oil holds gains, gold eyes 1900 level

Oil holds most of yesterday’s gains

After strong gains in the previous session, oil is edging away from weekly highs. Oil prices surged almost 4% in the previous session as risk sentiment improved, the likelihood of Iranian oil returning to the market faded, and expectations of a strong driving season in the US grew.

Yesterday, progress towards the revival of the 2015 Iran nuclear deal appeared to hit a snag amid reports that Tehran had cut off surveillance on its nuclear sites. An extension with the UN’s watchdog has since been agreed, opening doors to further talks and the possibility of an increased supply hitting the markets. Oil bulls don’t appear particularly deterred, as the black gold holds onto the lion’s share of yesterday’s gains. Goldman Sachs is bullish on oil with or without Iran’s sanctions being lifted, which in itself says a lot.

As inflation fears receded on Wall Street, rising risk appetite is adding to oil’s appeal, while a weaker US dollar is making it cheaper for buyers with other currencies.

Gold resumes run-up

Gold is resuming its run-up after a brief pause in the previous session. The precious metal has bounced off intra-day lows of USD1879 and looks back towards USD1900. Falling Treasury yields and a weaker US dollar continue to support gold. However, the upbeat mood in the markets could keep upwards progress slow.

Overnight, Fed speakers continued to drive home the now well-rehearsed dovish message, reassuring the market that the current spike in inflation is temporary. This news certainly appears to be sinking in for now, with the benchmark 10-year treasury back below 1.60% and the US dollar index below 90.00.

Attention will turn towards US consumer confidence due later. If a strong reading boosts the mood in the markets further, gold could struggle to trade out of the familiar USD1870-1890 range.

For a look at all of today’s economic events, please check out our economic calendar at 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.

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.
Sophie Griffiths

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