Oil jump on OPEC+. gold gains ground

Oil surges as OPEC+ sticks to output targets

Oil prices are spiking once again, with Brent crude smashing through 80 dollars for the first time in almost three years.  The move came as OPEC+ agreed to maintain output increases at 400,000 barrels per day, each month, despite high oil prices and a surge in demand for crude as a result of the global energy crisis.

Saudi Aramco claimed daily demand had increased by around 500,000 barrels as the natural gas shortage forces countries to seek out alternative sources. It always seemed unlikely that the group would take any other decision going into an uncertain winter in the northern hemisphere when Covid surges could result in further restrictions and weigh on demand.

It appeared to be a relatively short meeting as well, which suggests there wasn’t much disagreement. Of course, this may change over the coming months if oil prices continue to surge and the energy crisis morphs into something far worse. Especially if countries refrain from imposing restrictions and demand isn’t hit.

Gold a safe haven once more?

Gold appears to be benefiting from its traditional safe-haven appeal, with the yellow metal making decent gains on the day, although it has given a portion back already. It hasn’t always been that way over the last couple of years, with the dollar performing well in times of risk-aversion, which has weighed on gold prices.

Perhaps the prospect of higher inflation is pushing traders back to gold, although it’s still very early to say that with any confidence. Whatever has changed for gold, it’s now enjoying a third day of gains and is holding above USD 1,760 which was the next barrier of resistance. The next test will come around USD 1,786, the peak from a couple of weeks ago.

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

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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