Oil extends gains, gold vulnerable

Oil well supported after OPEC+ assessment

Oil prices are extending gains after the OPEC+ meeting today, at which producers agreed to continue to increase output by 400,000 barrels per day, next month. At the last meeting, the group agreed to continue with planned increases in January but made clear it could make adjustments at any point if omicron proves to be a significant drag on demand.

It’s clear based on today’s meeting that downside risks to demand from the new variant never materialized and the group is far more comfortable with the outlook based on the data they’ve seen. This will be encouraging for investors and could keep oil prices elevated around USD 80.

Gold bulls easily scared

Gold remains an interesting one to follow early in the new year, with traders seemingly bullish but easily scared. The bullishness is interesting given we’re in a monetary tightening environment, the dollar remains king and economic optimism remains strong. Perhaps this is a red flag, a sign that under the surface investors aren’t as confident as they would otherwise appear.

The yellow metal is holding above USD 1,800 and is up more than half a percent today. But it does appear momentum is starting to wane, with USD 1,833 seemingly still remaining key to the upside despite the yellow metal finally overcoming the unusually specific resistance level in mid-November.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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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.