Oil claws higher, gold lifted by FOMC

Oil continues to edge back to previous peaks

Oil prices are continuing to gradually rise on Thursday. Strong earnings and a cautious US central bank bodes well for crude, which saw the rally slow heading into Fed day. Oil is now closing in on its early July high so we could see the rally slow in the coming sessions after a remarkable bounceback.

The price plunged around 15% in the two weeks that followed the peak but most of this lost ground has now been made up again. The biggest downside risk to oil prices now is unsurprisingly the delta variant rapidly spreading and weighing on the economic recovery going into the end of the year.

Gold breaks higher after the Fed

Gold saw some support in the aftermath of the Fed meeting on Wednesday but a breakout today has seen it really gather upward momentum. Now back well above USD 1,800 and with its sights set on the July peak around USD 1,833, things are about to get interesting again.

This falls around the 50 fib – June highs to lows – with the 61.8 fib falling just above USD 1,850. Should we get that far, this will be the big test. A break of this could be very bullish in the near-term for the yellow metal. With the dollar a little soft and the Fed keeping yields low, gold could get some love once more.

The FOMC policy meeting was a well-balanced performance from Jerome Powell, a reflection of the wide range of views that clearly exist at the Federal Reserve. Powell won’t have the easiest time navigating over the coming months but the outcome should be favourable for investors. Tapering is on its way but it won’t be rushed, a balance that suits the markets.

The committee now has time to better understand the impact the current wave of infections will have, see how the inflation picture evolves and gather more data on the economic recovery that has shown such promising signs.

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

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