Oil stays strong, gold volatile

Oil heading for USD 100?

A winter storm in Texas appears to have been responsible for the latest spike in crude prices, as traders fret about the possibility of outages in the Permian Basin. In such a tight market, that’s more than enough to encourage traders to buy what was the mildest of dips following the OPEC+ meeting earlier this week.

With both Brent and WTI now comfortably above USD 90, it may just be a matter of time until we’re closing in on triple-figures. Another massive blow to households and businesses at a time of surging energy bills and rising interest rates. The squeeze looks set to continue.

Gold marching higher despite higher rate expectations

It was a volatile day for gold on Thursday, as both the ECB and BoE sent tightening shockwaves throughout the markets sending yields higher and the yellow metal temporary tumbling. The sell-off didn’t last though and it once again finds itself above USD 1,800 and, perhaps, even generating a little momentum.

The key test for any rally will come around USD 1,815-1,825 which is the 50/61.8 fib region for the pre-Fed highs to post-Fed lows. If gold can find a way through the key retracement zones even after so much more tightening has been priced in from a variety of major central banks, then the rally could have legs. The question is what it indicates. More safe haven plays? Or fear of even higher inflation and the need for more tightening being priced in? That won’t bode well for risk appetite, that’s for sure.

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