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Oil eyes USD 100, gold shines

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Oil rising on Ukraine tensions

The possibility of war between Ukraine and Russia has put oil prices on a one-way road higher.  The oil market is very tight and geopolitical tensions over Ukraine has energy traders eyeing a crude price move above the USD 100 level. OPEC Secretary General Mohammad Barkindo told reporters that OPEC+ is trying to ensure they will be able to supply oil to global markets. The political pressure will grow for OPEC+ to hit their quotas and to promise more output, but it doesn’t seem like anything will get them to pump more except if US shale booms back.

Crude prices are headed higher as demand continues to improve while global inventories remain at depressed levels. An Iran nuclear deal still seems far from happening and that should suggest any oil dips that emerge will quickly be bought.

Oil’s supply and demand fundamentals are very bullish right now, so it might not take much to trigger the move towards USD 100 for Brent crude.

Gold

Gold is breaking out as growth is decelerating and yields are rising. Gold got a big boost from the possibility of war between Russia and Ukraine, but what is rather impressive is that it held onto most of its gains despite the easing of tensions following Russian Foreign Minister Lavrov’s comment that Putin is ‘all right’ continuing diplomatic work.

Despite a 6.6 basis move higher to 2.003% with the 10-year Treasury yield, gold is rallying.  Gold is starting to garner strong interest as the need grows for protection against a Fed policy mistake, geopolitical risks, and growth concerns.

The USD 1880 level should prove to be key resistance for gold, but if that does not hold, bullish momentum could take prices to the USD 1900 level.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. 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. Prior to OANDA 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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