Oil in choppy waters, gold range-bound

Oil choppy as OPEC+ leans towards sticking

Oil prices are higher a little again on Wednesday, as choppy trade continues. With OPEC+ set to stick to current output targets, according to reports, focus will remain on demand and whether the global economy can achieve a more modest slowdown than feared in a very challenging environment.

The Chinese Covid transition also remains key with early data suggesting it’s been quite smooth so far and the recovery could be stronger than expected. That said, the Caixin Manufacturing PMI overnight suggested not all firms share that optimism, which could complicate things over the coming months. A strong rebound will obviously be a significant upside risk for crude prices which were weighed on last year during outbreaks and restrictions.

Sitting in a range ahead of the Fed

Gold saw strong support around $1,900 on Tuesday and even ended the session slightly in the green, highlighting the hope among traders for something of a dovish pivot from the Fed. It now trades in the $1,900-1,950 range established over the last week or two, with traders awaiting the next catalyst, which could come later today. There may be some expectation that the Fed will dig its heels in a little, despite the improvement in the data, and it could therefore take something quite hawkish to disrupt the rally in gold.

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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.