Oil stabilizes, gold supported at 1800

Gold remains well supported

We’re still seeing risk aversion in the markets, despite a rally earlier in the day and some positive moves into the close. Gold found support around USD 1,800 and moved back above USD 1,820, before giving some back. This comes as US yields continue to edge lower and as the dollar squeezes out another day of gains.

The yellow metal has been well supported in recent weeks and that could continue as long as policymakers hold their nerve in the face of higher inflation. The environment remains highly accommodative but challenges remain in the final months of the year which may encourage patience and continue to be supportive for gold prices.

Higher inflation has been making life a little harder for policymakers as they debate how transitory it is and at what point action might be necessary. This perhaps complicates the belief that central banks will always have the markets back. Should the price pressures persist, policymakers hands will be more tied than they’ve been for some time.

Oil steady after rough start to the week

Oil prices are holding steady on Tuesday after taking a hit on Monday on the back of the OPEC+ agreement and nervousness over the growth outlook for the rest of the year, given recent surges. Prices are still elevated compared to what we’ve seen since the pandemic hit but that’s to be expected as countries navigate themselves through the final stages of it.

WTI saw some support around USD 65 again today, around the levels it was peaking at late in the first quarter and well into the second. A move below here may signal some near-term downside momentum but I expect it would be quite limited given the longer-term outlook for many countries and how the exit strategy is being managed by OPEC+.

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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.