Oil dips lower, gold pushes higher

Oil edges higher off lows

Oil prices are marginally higher on Tuesday after once again seeing strong support around early November lows. We’ve seen the rally lose momentum recently as growth slows in the final quarter of the year, OPEC revises down demand growth and the White House threatens to release reserves from the SPR.

We’ve seen some incredible gains in the oil price this past few months as OPEC+ has resisted raising its output target, despite mounting pressure from consuming countries. Higher oil prices are contributing to inflationary pressures and are another headwind for the economic recovery this winter.

We could see prices pull back a little further if the economy continues to slow and rising virus cases further weigh on demand, as OPEC+ has anticipated, but this remains a bullish market and I expect dips continue to attract plenty of interest.

Gold rally losing momentum ahead of retail sales

Gold is pushing higher once again, supported by higher inflation indicators which continue to push down real yields. The yellow metal is traditionally viewed as a hedge against inflation and that’s exactly what we appear to be seeing now. The last couple of weeks have delivered strong gains for gold which now has its sights set on the summer highs above USD 1,900.

We shouldn’t get too carried away yet though. It’s up more than 5% from its November lows and quickly losing momentum, which should catch up at some point. Of course, it could regain momentum, say following the US retail sales report today, but recent trading suggests it’s running out of steam and a correction may be on the cards.

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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