Oil plunge could be short-lived, gold lower

Oil drops as Ukraine crisis eases

Crude prices declined over expectations that Russia may soon pull some troops and on optimism that an Iran nuclear deal is within reach.  Profit-taking with oil was inevitable after Russia’s Defense Ministry stated that some troops are starting to return to their regular bases after completing drills.  Talks between German Chancellor Scholz and President Putin supported market expectations that an imminent Russian invasion seems less likely.  The Ukraine situation still remains tense and oil prices could swing USD 10 in either direction.  The oil market remains very tight and regardless of the Ukraine situation, crude prices are still on course for a move towards USD 100 a barrel.

President Biden is expected to deliver some executive orders to help ease the pain Americans are seeing at the gas pump. Biden’s options are limited but do include tapping of the strategic petroleum reserves again or suspending gasoline taxes.

Gold

Gold prices tumbled over a de-escalation in geopolitical tensions and after a hot PPI report supported the argument for the Fed to take bolder action with that first rate hike.  Optimism that Russia could pull back some troops was the primary domino that sent gold lower.  Gold was ripe for some profit-taking but a sustained move lower might not happen as Wall Street remains mostly confident that the Fed won’t overtighten policy this year.

Gold prices should see strong support from the USD 1830 to USD 1840 zone as the easing of geopolitical tensions.

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