Oil Steady While Gold Bounces Back

Oil prices ease off highs and storms hit Gulf of Mexico

Oil prices are easing after pushing back towards their highs earlier in the week as two tropical storms headed for the Gulf of Mexico.

With more than 1.5 million barrels a day being taken offline in anticipation of the storms, crude prices inched up. Whether they will be sustained may depend on the level of damage that’s sustained and how long it will take the facilities to get back up and running again.

We haven’t seen as big a surge in oil prices as we may have otherwise seen but this isn’t exactly an undersupplied market.

Gold lower as yields continue to rise ahead of Jackson Hole

Gold is continuing to face near-term difficulties as US yields continue to edge higher, lifting the dollar with them.

The yellow metal was off around half of one percent today and finding support again around $1,920. As we moved into the afternoon session in Europe though, the trend changed as gold bounced off $1,900 and recovered back toward $1,950 where it is now seeing some resistance.

Traders have been disappointed at the Fed’s refusal to be drawn on yield curve control so any suggestion by Powell over the next couple of days that it is being considered, or that policy will change to enable inflation overshooting meaning lower rates for long, could depress yields once again and weigh on the dollar, putting some life back into gold.

I’m just not convinced officials deem it necessary at this stage when yields are already so low. It would take a big jump for such a shift to make a real difference.

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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