Oil volatile, gold rallies

Oil

Initially crude prices were unable to hold onto early gains after the EIA short-term energy outlook trimmed their demand outlook for gasoline and distillates. ​ Earlier, oil was rallying after a couple bullish calls from Goldman Sachs and Morgan Stanley. ​ Goldman raised their third-quarter Brent price forecast from USD 125/bbl to USD 140/bbl, while Morgan sees Brent reaching USD 130/bbl, with the upside potentially testing USD 150/bbl. ​ ​

The oil market is expected to remain tight as the supply side will continue to tell a story of low inventories. Crude oil inventories will likely post more draws as driving season and vacationing heats up. ​ ​

China’s COVID situation doesn’t seem like it may continue to head in the right direction. ​ With President Xi potentially attending Hong Kong’s July 1st handover anniversary, no one is expecting Hong Kong to go into lockdown.

Oil surged late after the US issued a statement to the IAEA board that suggested a revival of the Iran nuclear deal is still not any closer to happening. The US said, “What we need is a willing partner in Iran. In particular, Iran would need to drop demands for sanctions lifting that clearly go beyond the JCPOA and that are now preventing us from concluding a deal.”

Gold rallies as risk appetite dips

A lot of doom and gloom was good news for gold. Target’s second profit warning in 20 days and a downbeat outlook from the World Bank were just what gold needed to muster up a rally. ​ Treasury yields are also down sharply after yesterday’s surge, which is welcome news for bullion holders.

Gold is likely to consolidate around the USD 1840-1870 level leading up to Friday’s inflation report.

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