Oil hits 6-year high, gold rallies

Oil extends rally

OPEC+ drama is the icing on the cake for the rally in crude prices that is widely supported on an improving global economic recovery.  Everyone knows that the OPEC+ experiment wouldn’t last forever, but this somewhat surprise move by the UAE is just a smart posturing on their behalf.  It doesn’t make sense just yet for the UAE to leave the cartel, but they sure are getting ready for the eventual battle for market share.

Now that everyone expects crude prices to rise, the question is will Brent crude find resistance at USD85 or even the USD90 level.  An agreement could still happen in a week or two, but that uncertainty might be enough to support another surge in oil prices.  While the decision to keep output unchanged is what the current agreement says, no one should believe that OPEC+ members won’t start increasing output.

The oil market is heading toward a deeper supply deficit and that is supporting the kingdom’s decision to raise prices strongly.  Saudi Aramco lifted the official selling price for Arab Light crude by 80 cents a barrel to USD2.70 above the Oman/Dubai average for Asia, the largest monthly increase since January.

Crude prices turned negative as bullish bets became overcrowded and as optimism remains that OPEC+ will work this out and not allow the market to get too tight.


Gold prices are valiantly fighting off a potential death cross as stubbornly low Treasury yields shows steady flows boost sentiment for the precious metal.  For gold prices to continue rebounding, it needs to survive the upcoming Fed minutes that will most likely confirm their hawkish tilt.  Taper discussions are intensifying and that should drive a stronger dollar that could be a drag on gold prices.

After a disastrous June, gold is stabilizing but the downside short-term risks remain as the oil price spike is driving inflation concerns.  The long-term outlook for gold is still bullish as the low interest rate environment will likely remain in place over the next couple of years.  The 10-year Treasury yield has probably peaked for the remainder of the year and that should provide a friendly environment for gold to eventually recapture the USD1,900 level.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

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 TradeTheNews.com, 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.