Oil extends gains, gold in tight range

Oil is set to book fifth straight week of gains

Oil prices are on the rise for the third straight session and are on track to book gains of 2.5% across the week. This will mark oil’s fifth straight week of gains. Oil has only lost ground in one week since April 25th.

Both oil benchmarks steeled on Thursday at the highest level since 2018.  The fact that oil prices only seem to go up recently highlights the extent to which the demand outlook is outstripping supply. Current fundamentals are supportive of further gains. With economies reopening, fuel demand picking up and this increase in demand being met with limited supply – it screams bull market all the way.

Looking ahead, the outlook for oil hinges on the OPEC+ meeting on 1st July. We can expect some consolidation at these levels early next week ahead of Thursday. The OPEC+ group is likely to gradually increase production across the year, which could see the upside limited.

 

Gold stays in tight range

Gold is edging higher, paring mild losses from the previous session. Gold has traded in a tight range this week within familiar levels sub USD1800, after tumbling 6% in the previous week. Mixed messages from the Fed this week over interest rate expectations has been partly to blame for the choppy trading seen in the precious metal.

Recent US economic data has been weaker than forecast pointing to a slowing in the economic recovery. Yesterday, initial jobless claims and durable goods data came in below expectations offering some support to the precious metal. However, the agreement of Biden’s infrastructure deal has boosted risk sentiment hitting gold’s safe-haven appeal.

Attention will now turn to today’s PCE data, the Fed’s preferred inflation read. Expectations are for a 4% print YoY, up from 3.6%. A strong rise in PCE would support the Fed’s hawkish pivot and could drag gold closer to USD1750.

 

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.