OPEC+ stands firm on output targets
One group that has been very consistent in their communication is OPEC+ and today was no different. Producers opted to maintain monthly output increases at 400,000 barrels per day, despite growing pressure from consuming countries including the US. The decision will come as a surprise to no one given their communication recently.
The group is seemingly very comfortable with current price levels and wary of the potential for demand to fall in the coming months if Covid cases rise. That may change by the time they next meet on 2 December, if demand remains firm and prices jump above USD 90, for example, but even that may not be enough.
The fact that crude prices have fluctuated today but remain relatively unchanged from Wednesday’s close suggests traders have learned nothing new from OPEC+ today and the correction we’re seeing may have a little further to run.
Gold jumps as central banks get cold feet
Gold prices have jumped more than 1% today and came close to USD 1,800 before giving back some of those gains. This is despite the dollar also performing well today in contrast to their usual inverse relationship. In fact, they have moved in tandem over the last couple of days which has been an interesting development.
Yields have tumbled on the back of the cautious actions from the Fed and BoE and it seems that the dollar is simply doing well by default. Lower yields are typically good for gold, which has shown itself to be remarkably resilient in the face of rising yields in recent weeks. Now it seems it’s getting its reward.
Whether that will be enough to see it back above USD 1,800 is another thing. It’s been a strong area of resistance for the yellow metal. Maybe this will be the week it can finally close above. And with the US jobs data due tomorrow, that could be the catalyst if we get a surprisingly poor report.
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