Oil eases, gold extends rally

Oil pares gains as nuclear talks continue

The oil price rally is cooling on Tuesday as the US and Iran indirectly continue talks over the nuclear deal that could see more than a million barrels quickly come back online. It couldn’t come at a better time given how tight the market is, not to mention politically for President Biden ahead of the midterms. Voters may not take too kindly to the prices at the pump.

The talks are taking place just as crude was poised to make a run towards USD 100, which would be a real blow and write its own headlines. The cost-of-living crisis is painful for many households and businesses and triple-digit oil just piles on the misery. If a deal can be struck, it may still be avoided and afford the rest of OPEC time to hit its quotas. USD 100 looked inevitable but this could change that.

Gold remains a firm favourite

The gold rally has been relentless recently with the yellow metal notching up five days of gains in the last six and it’s on course to add another to that. It seems gold is fulfilling its historic role as an inflation hedge despite so many rate hikes already being priced in. Whether that’s the expectation of more or fear of it, gold has remained a favourite for investors.

Whether it can continue to build on recent gains is another thing. Gold has remained well supported but it’s struggled to make any real progress beyond these levels since last summer. The area around USD 1,830 has repeatedly been a major barrier and when it has briefly managed to overcome that, it hasn’t progressed much further. It will be interesting to see if history repeats itself.

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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