Oil moving higher, gold stable

Oil could go much higher

Oil prices have hit their highest levels since early March as Europe continues to work towards a Russian embargo and China looks to ease Covid restrictions. The lockdowns have offset some of the concerns over supply disruptions amid Russian sanctions following the invasion of Ukraine. The lifting of restrictions could be another bullish catalyst for crude.

With oil prices now at or above their recent range highs, the question becomes just how much further they’ll go and how uncomfortable it’s going to get. Both from an economic and monetary policy standpoint. The next test for Brent is USD 120 but let’s face it, a full reopening in China and an EU embargo could see prices rise much further.

Gold seeing support for now

Gold is marginally higher this morning after ending Monday in positive territory. Another brief dip below USD 1,800 didn’t cause too much of a wobble but I don’t think traders are rushing back in either. The yellow metal has seriously fallen out of favour despite ongoing inflation concerns as central banks attempt to make up lost ground.

Even widespread risk aversion isn’t helping gold and a much stronger dollar is making life very hard for it. If we are seeing a correction or even a recovery, the first test is USD 1,850 where it saw support earlier this month. Another break of USD 1,800 could be painful despite two successful defences of it so far.

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
Craig Erlam

Latest posts by Craig Erlam (see all)