Oil prices recovering, gold falls below $1900 on strong US data

Oil continues to consolidate amid an uncertain economic outlook

Oil prices are continuing to recover on Thursday after falling back toward their range lows on Wednesday. The gradual consolidation that we’re seeing in crude doesn’t appear to be nearing an end, with the price simply fluctuating between the range highs and lows over the last couple of months.

The uncertainty around inflation, interest rates, and therefore the economy may well be behind that as investors have frequently been caught out by just how stubborn price pressures have been and how much central banks will need to do in order to contain them. Until we get more clarity on that, this range trading may continue.

Gold under increasing pressure amid more economic resilience

Gold broke below $1,900 for the first time in more than three months earlier today on the back of stronger US data which in turn boosted US yields and the dollar. The economy remains incredibly resilient which will only make the Federal Reserve more nervous and convince policymakers that more tightening will be needed to get inflation under control.

A rate hike in July now looks highly likely and you can see that reflected in the markets, with it now more than 80% priced in. And that’s got investors wondering whether the Fed’s insistence that at least two more will be needed is as over the top as they first appeared to think. Recently, traders have found themselves chasing Fed expectations rather than the other way around.

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.