Oil and gold head south

Oil plunges again as imbalance risks ease

Oil prices are falling heavily again on Tuesday, taking total losses since the start of the week to more than 10%. Of course, that’s largely a reflection of just how far they rose since the invasion, with Brent now more than 25% from its highs just over a week ago. The talks between Ukraine and Russia aren’t just lifting market sentiment, they’re alleviating some of the worst fears around commodity supply disruptions.

Further compounding the declines are shutdowns across China which could continue to ramp up as case numbers spike. China is a huge oil consumer so this dent in demand could temporarily ease some of the imbalances in the market. More significant in the longer term is the Iran nuclear deal which appears to be making progress. Granted, at a snail’s pace, but that’s better than not at all. It seems sanction complications may be overcome which will move us a step closer to a deal and around 1.3 million barrels per day coming back onto the market.

Gold continues lower as commodities slide

Gold has continued to fall on Tuesday, off more than 1%, as risk appetite has continued to improve and commodity prices ease. It’s run into some support around USD 1,915 but the next test could come around USD 1,900. That said, over the last year or so USD 1,880 has looked a more significant area of support and resistance.

While progress in recent days has seen gold give up substantial gains – now 7.5% off its highs – it will quickly come back into favour if negotiations take a turn for the worse or sanctions targeting energy are intensified.

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