Oil consolidates, gold holds own

Oil consolidates as we await more data on omicron

Oil prices are down around 2% on Friday, dragged lower as trading becomes more risk-averse at the end of the week. It had rebounded well over the last couple of days but has run into resistance at the upper end of its recent range, around USD 73. We could see further consolidation around USD 70 in the coming sessions as we learn more about omicron, what restrictions it will bring, and whether OPEC+ will react.

The group has put a floor under the price for now, after announcing that adjustments could come at any time depending on the incoming data, but that will only hold so long if restrictions weigh on demand.

Relief for gold despite central banks embarking on tightening cycles

Gold is taking the news that central banks are tightening monetary policy and tackling inflation head-on very well. You would be forgiven for thinking this would be a negative development for the yellow metal and, in the longer term, I expect it will be.

But it’s also a development that was almost entirely expected and priced in. So we may be seeing some profit-taking on the pre-meeting moves which is pulling yields a little lower and weighing on the dollar. This should be a short-term relief move, although that may depend on what the omicron data tells us in the coming weeks. It’s spreading like wildfire here in the UK and other countries appear to having a very similar experience.

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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