Oil edges higher, gold under pressure

Oil loses momentum ahead of OPEC+

Oil prices are nudging higher again on Wednesday, with Brent up close to 0.8% and WTI lagging behind, up a little over 0.5%. Prices continue to be supported by the global recovery trade but the trend is showing signs of exhaustion ahead of next week’s OPEC+ meeting.

The discussion is likely to be intense again, with Saudi Arabia once more likely to be among the more cautious and Russia at the other end of the scale. US shale remains an ever-present risk for the group of producers and current prices may be making them nervous.

The workaround last month involved the Saudi’s taking a bit hit in order to ensure unity in the group. If they’re once again going to push for restraint, they’re likely to face stronger opposition this time around which should make for an interesting outcome.

Gold sluggish after Powell testimony

Federal Reserve Chair Powell’s testimony on Tuesday before the Senate Banking Committee was no gamechanger but it was successful in not spurring further unease in the markets. The dollar index remains above 90 though, with that crucial support still holding. A break of this would be bad news for the greenback and risk sending it back to its early January lows, maybe even lower.

Time will tell just how successful Powell’s comments will be and he’ll have another chance to reinforce that message later today. Yields have eased off slightly at the longer end of the curve, although they are a little higher on the 10-year today.

If yields ease off, it could be enough to force the dollar index back below 90 and propel gold higher. As it stands, it’s sluggish as the dollar is still technically in bullish territory and hanging in there but that could soon change, one way or another.

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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.