Oil surges, gold still stuck

Oil

Crude prices continue to rebound on optimism economic activity will get a boost from both easing Omicron virus jitters and on additional easing from China. The upbeat outlook for 2022 should pave the way for a massive uptick in crude demand as the Omicron virus variant seems poised to not yield massive lockdowns globally.

The energy market is still ripe for higher prices as production levels will remain depressed due to a lack of investment in new wells.  The President may have been a bit premature in celebrating the small drop Americans saw at the gas pump.  The risk is still for oil prices to go higher and if colder weather returns, we could easily see USD 80 oil in a couple of weeks.

Gold

Gold is struggling for direction as US stocks are getting close to returning to record-high territory as Omicron jitters ease. A slightly stronger dollar and rising Treasury yields has helped keep gold anchored. Real yields however are not rallying as much and that should be music to bullion backers’ ears.

Gold will likely remain a choppy trade until after Friday’s inflation report and next week’s FOMC meeting.  Gold should remain confined to the USD 1760 and USD 1800 range.

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.

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