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Crude rallies, gold stumbles

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Oil

Crude prices continue to rise and pleas to OPEC to increase production continue to fall on deaf ears.  The only thing that will get OPEC+ motivated is if private US operators signal they will increase production.  OPEC+ has been enjoying rising prices, steady demand, and little fear they will lose market share.

Jet fuel demand is a small part of the demand equation but that will definitely get a boost now that the Biden administration will allow international travelers to enter the US if they have a COVID vaccine authorized by the WHO from November 8th.  With US cases not seeing much of the spikes occurring across Europe and Asia, domestic holiday travel should be robust.  The return to school for children has not led to any significant surges that are straining hospitals.  Children as young as 5 also seem poised to get access to the Pfizer COVID vaccine.  The reopening of the economy could enter another gear and that could keep crude demand growth strong over the next couple of quarters.

WTI crude still has only one way to go and that is higher.  The oil market deficit that is in place won’t be changing anytime soon and that means a jump to USD 90 oil seems likely.

Gold weakens as risk appetite soars

Gold is weakening as investors see little reason for safe-havens as stocks continue to make fresh record highs.  Well over a quarter of the way through this earnings season and over 80% of the S&P 500 companies have delivered earnings that topped expectations.  Gold may struggle in the short-term as risk appetite is running wildly and most of the inflation news has been priced in.

A strong dollar might emerge post-ECB and that could tentatively drag bullion down. Gold is forming a range with prices likely to trade through the USD 1800 level a little while longer.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. 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. Prior to OANDA 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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