Oil dips, gold rebounds

Oil

Crude prices are declining as Beijing tightens up their Covid controls and as tanker-tracker data showed Russian crude flows increased. ​ Energy traders are not convinced that the EU will be able to move forward with an embargo on Russian oil. ​

Oil seems to have major support around the USD 100 level as OPEC+ seems poised to rubber-stamp next month’s output increase target that they probably won’t hit. ​ Still weighing on oil is the uncertainty with China’s Covid situation. ​ Energy traders are also keeping a close eye on the Fed policy meeting which could contain a hawkish surprise that sends the dollar higher, which will drag down commodity prices.

Gold

Gold’s two weeks of pain appears to be over as Wall Street has priced in the majority of global central bank tightening. ​ After a major run higher for US and European bond yields, non-interest bearing gold is mustering up a rally as fixed income traders appear to be getting closer to pricing in peak hawkishness.

Gold has been battered as investors brace for the most hawkish Fed policy decision since the start of the millennium. ​ The dollar rally could be getting closer to nearing its end and that should be good news for bullion. ​ Gold’s fate could very well be determined on how aggressive the Fed will be with balance sheet normalization.

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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