Oil volatile, gold rises


Crude price volatility is here to stay as demand uncertainty remains elevated over the short term.  There is a lot of noise in all this morning’s headlines, but given the relentless winning streak, oil prices are ripe for significant rounds of profit-taking.  Earlier oil prices were supported after Russia told Europe they won’t get extra gas without granting approval of Nord Stream 2.  Shortfalls in natural gas will clearly lead to added demand for crude, but energy traders faded that move as Russia is known to always be posturing.

The IAEA Chief noted that surveillance at the Tesa Karaj facility was no longer “intact”.  Expectations were growing that Iran was shortly going to return to the negotiating table for reviving the 2015 nuclear deal, but if IAEA can’t monitor Iran’s nuclear activity, energy traders won’t hold their breath for any breakthroughs.  Expectations for a revival of the nuclear deal will drift into next year and so could possible sanction relief and more barrels of Iranian crude.

WTI crude is ripe for a pullback but any weakness might be limited as the short-term outlook still remains very bullish.

Gold in choppy waters

Gold prices are rallying as the return of risk appetite sent the dollar lower.  Gold will remain a choppy trade as investor expectations on rate hike timing will be dictated over the next few inflation reports.  Everything from earnings season suggests pricing pressures will remain over the next couple of quarters and that could keep the upward yield pressure on the shorter end of the curve.  Complicating the short-term outlook for gold is the inability of lawmakers in getting Biden’s infrastructure deal and economic package done.  Talks will drag into November and this will delay the economic recovery.

A wrath of Fed speak might provide some insights over what Fed Chair Powell might say on Friday.  Concessions that inflation is persisting could tentatively send gold prices lower.

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.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya