Oil bounces back, gold under pressure

Oil rebounds as Saudi Arabia boosts prices

Oil prices are bouncing back on Monday, up more than 2% after coming under significant stress last week. Reports of Saudi Arabia raising crude prices are apparently behind the move, although I’m not entirely convinced. Sure, it portrays confidence in the markets but it doesn’t alter the uncertain outlook in any way. I think it’s probably just a risk rebound as we’re seeing elsewhere.

Ultimately, the most bullish thing for prices is that Omicron is reportedly less severe and if more good news follows, we can all relax a little and the downside risks to the economy will abate. If the good news doesn’t follow, OPEC+ will pare back output and support prices that way. The question is how much the lows will be tested in the interim, if at all. Producers’ resolve has been tested before on many occasions.

Gold remains under pressure as USD creeps higher

Gold remains under pressure, as US yields at the shorter end of the curve and the dollar continue to creep higher. As is the case with every other asset class, the yellow metal will remain extremely sensitive to developments over the next couple of weeks as we learn how great a threat Omicron will pose and what the monetary response will be.

It’s found some support around USD 1,760 late last week where it has repeatedly done so since the middle of October. A move below here could see focus shift back towards USD 1,720 and then USD 1,680 which would be around the lows for this year.

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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