Oil pares losses, gold dips

Oil

Crude prices dropped after the China National Food and Strategic Reserves Admin (SRB) stated they are working on the release of crude reserves. WTI crude has dropped almost nine dollars since the recent highs as energy traders appear to have mostly priced in the impact of a coordinated SPR release between the US and China.

The oil market deficit will still remain despite the tapping of reserves and the next big move for prices will most likely depend on the weather.  Natural gas prices may be the key short-term driver as Russia plays hardball with Europe. Any natural gas shortages will lead to additional crude demand as the scramble for alternative energy sources intensifies.

Gold

Gold prices need a fresh catalyst after a wave of monetary policy decisions showed a diverging view of how central banks are battling inflation. Gold is stuck in wait-and-see Fed mode and that could remain the case till the end of the year. Rising concerns of growing restrictive measures in Europe could lead to short-term growth concerns that have yet to boost bullion.

Gold may consolidate between the USD 1850 and USD 1880 level until Wall Street gets a better handle on where risk appetite is going next.

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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