Oil remains choppy, gold under pressure

Choppy trade continues

Oil prices are bouncing back a little after slipping throughout the last week from their recent highs. The optimism around China today may be responsible for the gains we’re seeing in crude which would make a lot of sense given it’s the world’s largest importer and expected to recover strongly from the Covid transition.

But as we’ve seen over the last few months, there’s more to this story than just China and the decline over the last week was likely a reflection of more pessimistic global expectations against the backdrop of higher interest rate forecasts. Sentiment remains very fragile and the economic data is inconsistent. Until we see an improvement in the latter, the former will likely remain choppy, as will the price of oil.

Does the correction have further to run?

Gold traders do not share the eternal optimism that equity and crypto traders possess and recent weeks have highlighted that perfectly. The yellow metal fell into a corrective pattern and has struggled to get out since. It pared some losses on Friday to end the session higher around notable support in the $1,820 region. The long lower wick from the days’ trade may be a bullish signal in the near term, although I’m not convinced the correction has run its course. Below here, the key zone falls around $1,780-$1,800.

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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