Oil prices edge lower, gold under pressure

Oil settles after a volatile start to 2023

Oil prices are a little lower again at the end of the week, settling it seems somewhere around the middle of the new year range. Sweeping risk aversion in the markets and concerns around a potential deeper slowdown driven by higher rates will have that effect but once again it’s worth noting that sentiment in this market is fickle. It clearly doesn’t take too much, as we saw in early January, for investors to become euphoric, nor does it take much for them to lose their nerve. That could remain a key feature of the first quarter and ensure oil prices remain highly volatile.

Lost momentum and setting up for a correction

The Fed surge in gold appeared to be built on weak foundations as momentum simply didn’t match the price rally. That isn’t to say it couldn’t play catch up but yesterday’s plunge may suggest that won’t happen just yet. Instead, the yellow metal finds itself testing interesting support around $1,910 and then $1,900. The first is the ascending trend line from early November and the second is recent support but could also be considered the neckline of a two-week double top. Either way, a break of these levels could propel the yellow metal into a correction phase.

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Former Craig

Former Craig

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.