Oil remains choppy, gold under pressure

Choppy trade continues

Oil prices are bouncing back a little after slipping throughout the last week from their recent highs. The optimism around China today may be responsible for the gains we're seeing in crude which would make a lot of sense given it's the world's largest importer and expected to recover strongly from the Covid transition.

But as we've seen over the last few months, there's more to this story than just China and the decline over the last week was likely a reflection of more pessimistic global expectations against the backdrop of higher interest rate forecasts. Sentiment remains very fragile and the economic data is inconsistent. Until we see an improvement in the latter, the former will likely remain choppy, as will the price of oil.

Does the correction have further to run?

Gold traders do not share the eternal optimism that equity and crypto traders possess and recent weeks have highlighted that perfectly. The yellow metal fell into a corrective pattern and has struggled to get out since. It pared some losses on Friday to end the session higher around notable support in the $1,820 region. The long lower wick from the days' trade may be a bullish signal in the near term, although I'm not convinced the correction has run its course. Below here, the key zone falls around $1,780-$1,800.