Oil prices climb, gold stopped by yields

Oil jumps as IEA confirms tight market conditions

Oil prices are rallying once more as the IEA raised forecasts for demand this year and confirmed that OPEC+ missed its output targets again in January and by an even wider margin of 900,000 barrels. The group acknowledged that the market is tight right now while highlighting that a nuclear deal between the US and Iran could release 1.3 million barrels of supply. There was also a nod to Saudi Arabia, where available spare capacity is apparently concentrated. Not that the White House is having any luck convincing them to unleash it.

Gold slips after inflation data

A jump in yields on Thursday on the back of the inflation data stopped gold from recording the eighth day of gains in nine. The yellow metal gave up initial gains to end the day a little lower as markets priced in a sixth hike this year in the US and yields elsewhere also rose.

Gold has remained a favourite recently even as rate hike expectations have increased, probably benefiting from its inflation hedge reputation, but there’s surely going to come a point when so many hikes are priced in that it will lose some appeal. That’s not to say it will suddenly tumble but gains may become limited, as we’ve seen in recent months around these levels.

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Craig Erlam

Craig Erlam

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.
Craig Erlam