Crude crumbles, gold struggles


The easy oil trade that everyone loved for much of the first half of the year has disappeared as the fundamentals have gotten quite mixed. The OPEC+ decision to maintain the planned 648,000 bpd oil increase in August went as expected, but traders are focusing more on President Biden’s trip to Saudi Arabia. Biden is going to try to get the Gulf alliance to pump more crude and if he is successful, oil could tentatively test below the USD 100 level. 

The demand outlook might be deteriorating as gasoline usage has disappointed despite nice weather for the start of the summer driving season. The consumer is struggling with widespread inflation, so five-dollar gasoline will mean shorter trips and possibly less travel for many households. 

Gold’s struggles continue

Gold’s poor quarter could not end fast enough.  Gold has struggled as a relentlessly strong dollar was driven by aggressive Fed tightening calls that triggered rising recession fears.  Even with the Fed’s favorite inflation gauge falling a little faster than expected, no one should confidently be saying that the peak inflation is firmly in place.

If it gets uglier for gold over the next week of trade, it should have major support at USD 1785 and that could hold as the dollar peak might be in place. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. 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. Prior to OANDA he worked with, 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.