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Oil volatile, gold edges higher

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Oil rallies on invasion fears

Crude prices rallied reports that the Biden administration expects Russia to invade Ukraine within 48 hours.  Oil extended the rally after Ukraine was hit with another cyberattack.  The Ukraine situation seems to be heading towards a pivotal moment a lot sooner than everyone was hoping for and that means oil prices could surge here.  An immediate run towards USD 100 oil is still in the cards, but the rising prospects that an Iran nuclear deal could be reached in the coming days may tentatively delay a breaking of the century mark.

WTI crude should remain around the low USD 90s until a major update with Iran nuclear deal talks or if the new Cold War leads to military conflict. Even if an Iran nuclear deal is reached, it will take months to ramp up output so even if oil drops 5%, energy traders will likely buy into that weakness.

Gold

A rocky session on Wall Street saw gold prices settle higher as Ukraine gets ready for war.  Earlier optimism that the Russia/Ukraine conflict could find a path towards diplomacy quickly evaporated, prompting investors to run back towards safe-havens.  The gold trade is an easy one right now as geopolitical tensions will continue to drive inflationary pressures to the next level, which will feed into aggressive Fed tightening calls that will threaten financial conditions and ultimately economic growth.

Gold is still respecting the USD 1920 level for now, but a break could see an easy path towards the USD 1950 region.

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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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