Oil gains ground as risk appetite improves, gold steady

Oil prices have continued to recoup losses in recent days as sentiment has improved, yields have edged higher and global economic prospects have improved. Recent volatility has been a firm reminder of the uncertainty that lies ahead, even as we seemingly near the end of the tightening cycles. While some consequences of much higher interest rates will be obvious, others will be much harder to foresee and that brings downside risks for growth.

But with the recent turmoil abating, the economic outlook is looking slightly better and that has enabled oil prices to recover a little over half of their losses. Further upside could be on the cards but that will depend on multiple factors. Brent and WTI are currently trading around the range lows from early December to early March and it will be interesting to see if they can break back above that psychological barrier.

Gold holding firm

Gold has given back a small portion of its recent gains but it continues to trade not far from the highs of the last couple of weeks. The reason for that is interest rates; expectations have not changed that much since the banking turmoil which suggests investors see scarring in credit markets that will do the Fed’s job for it and maybe even tip the economy into recession, requiring multiple rate cuts later in the year.

This is positive for the yellow metal and could ultimately prove to be the catalyst that not only enables it to overcome the $2,000 psychological barrier but also eye up the all-time highs near $2,070.

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

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