Oil and gold dip lower as US dollar rebounds

Oil slips on stronger dollar

Oil prices are down 1% on the day, dragged lower by the bounce in the dollar and the softening in risk appetite at the end of the week. Still, we’re not too far from the range highs in crude, the question is whether it can be sustained in the face of the spiking Covid cases around the world. OPEC+ struck a cautiously optimistic tone this week while sticking to small increases in output this month. US production has continued to decline but with oil back above USD40, can we really expect that to last? A weaker dollar will naturally help support prices.

Gold edging lower as real yields bounce back

Higher real yields in the US took the energy out of the gold bounceback midweek and it’s struggling to pick itself up, with the yellow metal down around half a percent today. The rebound in the dollar is naturally making life difficult for gold but the greenback did break through significant support earlier in the week so it remains on a bearish trajectory. That’s good news for gold. Of course, if the dollar index can quickly pick itself up and break above 94, that may change things.

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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.