Oil and gold both pare losses after Putin says Ukraine not serious in finding acceptable solution

Covid, Ukraine weigh on oil

The unwind of the oil trade is an easy one as a few reasons sent prices lower: China’s Covid surge has worsened as more lockdowns occur, expectations of a long Russia-Ukraine war has decreased as Eastern European leaders show unequivocal support for Ukraine’s independence, countries like India have bought Russian oil at a heavy discount, and manufacturing activity in the Empire State dropped to negative territory and the lowest levels since early in the pandemic.

Supply shortage fears have somewhat disappeared as the Russians are still selling their oil and crude demand destruction fears are getting real.  A temporary China slowdown was somewhat expected given their zero-Covid approach, but the Empire State index plunge could be a worrying sign if next month’s reading doesn’t rebound strongly.

Earlier, WTI crude was roughly 28% lower from last week’s high and seemed poised to give up all the gains that occurred during the Russian invasion of Ukraine.  WTI crude should find support ahead of the USD 90 level, but if China’s lockdown spreads much further, the mid-USD 80s would not be that hard to reach.


I never thought that I would be writing about both gold and AMC’s stock.  In the past, a connection could be made with the new millennial trader pumping up meme stocks and riding the cryptocurrency rollercoaster, but they typically avoided gold. It appears meme stock trading is trying to make a comeback with Hycroft Mining, a little distressed gold miner, but that should suggest more companies will follow suit.

Gold prices are still heading lower even as bond market selloff takes a break ahead of the FOMC rate liftoff decision.  It seems the gold market is a victim of the abandon widespread commodity appreciation trade.  Gold prices are trying to find a floor and eventually will stabilize even if oil prices continue to slide.  What will eventually provide some support for gold is that the world’s two largest economies are showing some signs of weakness.  The US may have some softer economic data due to the surge in commodity prices and China will suffer economic weakness from growing Covid lockdowns.

Gold prices pared losses after Russian President Putin said that Ukraine was not serious about finding an acceptable solution. The war in Ukraine does not look like it will have any immediate de-escalations and that should provide underlying support for gold prices.  If the FOMC decision shows some policy members are holding back some rate hikes on the dot plots, gold could get its groove back and make a climb back towards the USD 2000 level.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. 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. Most recently 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 and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya