Oil rises, gold extends rally

Oil pushing higher as OEPC continues to disappoint

Oil prices are continuing to push higher after spiking on Tuesday. The slight easing of restrictions in China and pushback from OPEC to EU requests for higher output triggered a sharp rally yesterday just as the price was flirting with double digits. Chinese restrictions have weighed on demand forecasts and eased the pressure on prices recently but that was always likely to be temporary.

Longer-term, the market remains very tight and with plenty of upside risks in the price. Russian output remains a source of uncertainty given the impact of the war in Ukraine on its exports. While the reluctance of OPEC+ to significantly raise output – well, those within the group that can – isn’t helping ease the pressures in the market. Even OPEC hitting current targets would help.

Gold eyeing USD 2,000 on day six of the rally

Inflation concerns appear to be driving the latest move in gold which is rallying for a sixth consecutive day.  After breaking through the upper end of its range in recent days, the yellow metal appears to have its sights on USD 2,000 which would be a major psychological breakout at a time when central banks are expected to hike as aggressively as they are.

There isn’t an abundance of risk aversion in the markets at the moment, although investors will no doubt continue to be cautious in such a highly uncertain environment. There appears to be plenty of momentum in the rally at the moment which could make the test of USD 1,980 resistance interesting.

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Craig Erlam

Craig Erlam

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.
Craig Erlam