Oil in choppy waters, gold recovers

Oil choppy amid OPEC+ rumours

The battle between the economic outlook and OPEC+ continues in the oil market, with prices boosted by reports of discussions between producers around an output cut ahead of the meeting next week. This shouldn’t come as a huge surprise under the circumstances as the alliance has previously alluded to its willingness to cut further if fundamentals change.

The question is whether they’ll take the leap given the enormous uncertainty in the economic outlook at this point. Or whether they’ll opt for another, slightly more forceful, warning to the markets to not get carried away speculatively pushing prices lower. Brent and WTI have been trading at pre-invasion levels recently, something the group may not be comfortable with. With Russia reportedly backing a one million barrel per day cut, a substantial option will at least be on the table which could push prices back to late summer levels.

Gold recovers to trade a little higher

Gold managed a small recovery on Wednesday as US yields pared recent gains and the dollar eased off its highs. It may have been overly optimistic to hope that would continue in the current environment although after slipping earlier it has recovered to trade flat on the day. While we could see some upside in the near-term as the dust settles, I don’t think policymakers are in the mood to soften the hawkish rhetoric and the data doesn’t yet support such a move. That could maintain pressure on the yellow metal for now.

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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