Oil eyes OPEC+, gold under pressure

Calling OPEC+ bluff?

It’s not just the resolve of Japan’s Ministry of Finance that’s being tested by the markets at the moment, with oil prices trading not far from their late summer lows despite the warning shot from OPEC+ earlier this week. While the 100,000 barrel cut wasn’t fundamentally significant, it was clearly intended as a warning not to drive the price lower or face further cuts. Unfortunately, it seems traders are in no mood to be told what to do and growth fears are instead dictating the price direction.

The question is how long will OPEC+ wait and how low will prices be allowed to fall before the alliance calls one of those emergency meetings it warned about? A move below $90 in Brent could be very interesting if traders hold their nerve for that long.

Gold looking vulnerable

A stronger dollar and higher US yields put a swift end to the gold recovery trade on Tuesday, with the yellow metal running into resistance around $1,730 where it had previously seen strong support. It doesn’t bode well for gold, with the dollar remaining a strong favourite and aggressive tightening still on the agenda for central banks. The next big test is $1,680, a break of which could signal a very bearish shift in the gold market and see it trading around two-year lows.

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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