Crude rallies, Gold hovers around USD 1900

Oil surges as West tightens sanctions

Crude prices surged after the West delivered a stronger round of sanctions that raised the risk that Russian energy supplies could be next to get targeted.  Energy traders are awaiting the US and allies to tap their strategic reserves, which could unleash 70 million barrels of oil.  The oil market will remain very volatile as the risk of losing access to Russian energy supplies grows.  The uncertainty over how the Ukraine war will unfold has too many risks that include nuclear threats, which means any oil price dips on any strategic release announcement will be short-lived.

Russia and Ukraine may have another round of talks, but it doesn’t seem like anyone is optimistic that a major de-escalation will happen anytime soon.  OPEC+ is expected to stay with their gradual output increase strategy this week, ignoring global calls for increased output. Crude supplies are not increasing at a fast enough pace and the energy market is still very vulnerable to a massive shock.  Brent crude still seems poised to make a strong run well above the USD 100 a barrel level over the short-term.

Gold in choppy waters

Gold prices are higher but are underperforming other commodities and cryptocurrencies.  Gold is somewhat stuck at the USD 1900 level and that might persist until global growth concerns intensify.  Gold will get its groove back once inflationary pressures threaten growth prospects.  Stagflation will be the key word that gets tossed around and that should ultimately trigger safe-haven flows towards gold.

Gold investors looking for it to rally back towards USD 2000 will need to be patient.  Gold could have one major shock if Russia is forced to offload some of its gold holdings. Gold should find strong support around the USD 1840-1850 area if bullish bets are pulled off the table.

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