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Oil slumps, gold captures $1900

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Oil pulls back

For one day, energy traders decided to forget about how tight the oil market remains and took some risk off the table as Wall Street hit the sell button with every risky asset over rising geopolitical concerns.  President Biden believes there is still a high risk for a Russian invasion of the Ukraine and that will be the primary catalyst for risk appetite.

Oil prices are on sale today and whatever weakness is happening will likely be short-lived.  Geopolitical tensions should be bullish drivers for crude prices and the risk of USD 100 oil is still very high over the short-term if Russia invades Ukraine.

WTI crude is resting at the USD 90 level and if the pullback continues, massive support lies at the USD 85 level.  Even if energy traders become convinced an Iran nuclear deal will happen, the oil market is too tight for prices to fall below the mid-USD 80s.

Gold pushes higher on Ukraine crisis

A month ago, no one wanted to touch gold. Now gold has suddenly become the flavor of the month, now that investors are scrambling for safe havens as geopolitical risks intensify and fears grow that the central banks might go overboard with tightening monetary policy.  A sea of red on Wall Street has sent gold above the USD 1900 level and investors might see further bullish momentum if the Ukraine situation intensifies.  Earlier de-escalation in Russia-Ukraine tensions in the week have been completely undone and now it seems the risks of an invasion are growing.

Gold has key resistance around the USD 1920 to USD 1930 zone, but if the haven bid remains strong, bullish momentum could support a move towards the USD 1970 level.

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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.
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