Oil loses ground, gold eyes FOMC

Oil hit by higher inventory numbers

The oil price correction has accelerated on Wednesday on the back of inventory data from API and EIA which showed larger than expected increases last week. The numbers may have come at just the right time as well, with the rebound starting to run into resistance again a little shy of last week’s highs.

Perhaps this is the clearest sign yet that we’re going to see a deeper correction after the recent dip was quickly bought up after just a couple of days. A move below last week’s lows could see Brent and WTI slip below USD 80 for the first time in almost a month. I don’t think it will be long before support arrives again though unless OPEC+ surprise us all tomorrow and raise production targets.

Gold slipping ahead of the Fed

Gold is coming under heavy pressure ahead of the Fed meeting, perhaps the clearest indication that traders fear a possible hawkish shift from the central bank. All it will take is a slight tweak for traders to interpret at least one rate hike is being lined up for next year. A dropping of the reference to inflation as transitory, for example, even if replaced by something that still indicates they believe it will correct itself over time.

That may be what gold traders are anticipating as the dollar is relatively flat on the day while US yields are only a little higher. Gold has been struggling for days in the run-up to this. Repeated failures to break and hold above USD 1,800 has chipped away at sentiment and it would appear it’s finally caved. It’s finding some support around USD 1,760 but that may not last if the Fed turns more hawkish later on.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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.

Former Craig

Former Craig

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.