Oil dips, gold vulnerable

Oil pares gains

We’re seeing small losses in crude after a strong start to the week. That may reflect the reversal in risk appetite during the European session as the latest equity bear-market rally quickly runs on fumes. A bear-market rally is certainly not how you can explain the moves we’ve seen in oil markets this week; quite the opposite in fact.

Oil’s only hope for a substantial price correction lies in a global slowdown or recession. Chinese lockdowns could dent demand in the short-run but as we’ve seen before, prices eventually bounce back. Recession fears aren’t going away which may slow any ascent in crude but no one can ignore the obvious imbalance in the market which should broadly keep Brent and WTI in triple figures.

Gold out of favour

It’s been a very interesting few days for gold. For a long time, we have been able to point to a stronger dollar and rising yields to explain why it’s fallen out of favour even in periods of risk aversion when traders often gravitate towards safe-havens. But in recent days, the dollar made decent losses and yields were fairly steady but gold failed to capitalise.

That’s not a great signal for the yellow metal which is now looking very vulnerable around USD 1,700. As I’ve said before, USD 1,680 may be more important, given how it’s historically traded around there but either way, a break of USD 1,700 would be a blow.

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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