Oil closing in on USD 100, gold dips

Oil eyeing USD 100 after Ukraine escalation

While stock markets are enjoying a partial recovery, oil and gas prices remain elevated as a conflict in Ukraine significantly increases the risk of disruptions to Russian supply. While there is reportedly no desire to intentionally restrict supplies in the face of further escalation, assurances will be taken with a pinch of salt given recent developments.

The market remains extremely tight for oil and gas and the risk of disruption will result in a significant risk premium for as long as the possibility of conflict remains. A nuclear deal between the US and Iran will alleviate some of the pressures in the oil market but as we’re seeing, that’s doing little to stop oil prices marching towards USD 100.

Gold pares gains but remains well supported

Gold is now trading a little lower on the day after trading as high as USD 1,913 earlier in the session as risk appetite has gradually improved. The recovery looks fragile at best and barring a significant positive development, it’s hard to imagine gold not seeing plenty of support on the dips.

For so long, people have questioned gold’s position as a safe haven and an inflation hedge but recent events have put that debate to bed. The yellow metal continues to trade around USD 1,900 and could go much further in the event of major escalation.

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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