Oil steady, gold under pressure

IEA offers a bleak outlook for crude

Oil prices are relatively flat on Thursday, after once again edging lower earlier in the session. Crude has been paring gains in recent days after a huge run higher over the previous month but prices are still extremely high. Risks remain tilted to the upside even as recession risks take some of the heat out of the market.

The good news just keeps coming in the oil market, with the IEA reporting today that it expects record global oil demand next year paired with supply struggling to keep pace as Russia is forced to shut in more wells and other producers are constrained by capacity. In other words, the market will remain extremely tight and prices high. A recession may ridiculously be the only hope for balance in the market and lower prices. Although refining capacity won’t even hit pre-Covid levels next year which will continue to boost prices at the pump. ​

Gold recovery may not have legs

A volatile week in gold has seen it break through the bottom of the recent range only to recover a little around USD 1,800. A stronger dollar remains a major headwind for the yellow metal and in these conditions, it’s hard to imagine it falling out of favour. Yields are continuing to rise and central banks are hiking aggressively in a desperate attempt to rein in inflation. It doesn’t bode well for gold even in these risk-averse markets.

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