All eyes on OPEC+, gold ticks higher

How much will OPEC+ cut by?

Markets have been awash with OPEC+ speculation this morning, with reports suggesting the group will consider an output cut in excess of one million barrels per day and that Saudi Arabia could unilaterally add to that. After a year of tolerating extremely high prices, missed targets and severely tight markets, the alliance seemingly has no hesitation when it comes to acting rapidly to support prices amid a deterioration in the economic outlook.

Any cut will no doubt frustrate consuming countries that are on the verge of recession after spending a year dealing with soaring energy costs on the back of the post-pandemic recovery and war in Ukraine. It’s a fine balancing act and the size of the cut will determine the scale of the backlash. Although as we’ve seen before, that hasn’t really changed the outcome.

Can gold build on recent gains?

Gold prices are inching higher this morning, up around half a percentage point, as US yields soften a little. I’m not sure gold bulls will be getting overly excited by today’s move, especially ahead of Friday’s jobs report which could cause another stir. But the yellow metal is continuing its gradual rise towards the $1,680-1,700 region where it could face plenty of resistance. Should we see signs of peak inflation and interest rate expectations in the weeks ahead, gold could find itself back in favour, but given recent experience, that may be a lot to expect and traders could initially proceed with caution.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Former 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.