Oil prices recover, gold stuck in range

Oil risks remain tilted to the upside

Oil prices are around 1% higher, continuing to recover from Friday’s sharp sell-off. The oil market remains extremely tight but it seems the rising threat of recession created a compelling argument for it to correct lower last week. There’s no doubt that a recession could help rebalance the market and pull prices lower but for many, that is not the base case. So any corrections are still likely to quickly see a flurry of buyers, as we’re now seeing.

In the same way that Chinese lockdowns slowed rallies in recent months, the increasing threat of recession could do similar over the summer. That said, the risks remain tilted to the upside as supply simply can’t keep up with demand.

Gold could be rangebound for a while

We’re still seeing plenty of indecision and choppiness in gold. It struggled to build on the momentum of last week’s surge and is now on course for a third day in the red. That’s not a particularly bearish signal, more a reflection of how the week has started in the markets. The absence of the US makes it hard to read too much into the moves until now.

The key level to the downside remains USD 1,800, with USD 1,870 the big test above. It wouldn’t be a surprise to see the yellow metal fluctuate between these two levels for a while longer yet.

 

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

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