Oil pares losses
Oil prices are slipping again on Monday, although it has recovered the bulk of the losses from earlier in the day.
Recession fears are increasingly driving these markets and that’s one reality that could limit the rise in oil prices over the medium term. The prospect of further Covid restrictions in China is a near-term headwind for crude prices, also, which could see them trade closer to $100 a barrel as we saw earlier this year.
Joe Biden’s trip to Saudi Arabia this weekend will also be closely monitored as the President hopes to tap into the country’s spare capacity ahead of what could be bruising midterms later this year.
Gold has lost its shine
The dollar is king and gold has well and truly lost its shine after breaking below $1,800 last week. Don’t get me wrong, we saw plenty of resilience in the run-up to it but the eventual breakout was explosive and it’s still in a state of shock.
It barely pared any of the losses before the selling pressure started to kick back in. With the dollar so heavily backed, there isn’t much of a bullish case for gold currently, with $1,680-1,720 offering the next major test of support below.
Bitcoin’s recovery last week may have excited some but I imagine most will have viewed it with significant doubt. Not only is the broader market environment not in its favour, even if the occasional bear-market rally inspires some hope, but the crypto community isn’t exactly buzzing either.
Perhaps there’s an acceptance that the downturn will continue for some time yet and the storm must simply be weathered. It’s just a question of how treacherous it’s going to get. There remains plenty of focus on $20,000 but at this point, $18,500 and $17,500 are probably more important.
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.