Oil gets a GDP boost, gold drops ahead of Fed

Oil

Crude prices got an unexpected boost from a US economy that doesn’t want to break. Another round of US data supported the argument that this economy still could get a soft landing, which is very positive for the short-term crude demand outlook. The problem with the long-term growth outlook for the US economy is that it needs a recession in order for inflation to get tamed. ​ Strong data is not necessarily good news for winning the war against inflation and that will weigh on long-term US growth prospects. ​

Improving news with China’s COVID situation and a resilient US economy should keep oil prices supported above the $80 region.

Gold

Gold is softening a bit as better-than-expected US GDP data supports the argument that the Fed could still deliver a soft landing. ​ Gold’s rally was on hold until the FOMC decision, so this morning’s weakness to strong GDP and jobless claims data was an easy trade. Safe-haven demand is still needed as the consumer is clearly weakening here and we will probably need to wait a little longer for GDP and claims data to catch up.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya