OPEC cut likely, gold faces resistance

A substantial OPEC+ cut incoming

Today’s OPEC+ meeting has been heavily speculated about this week, as delegates have hinted at increasingly large output cuts in response to a dimming economic outlook and lower prices. Last month’s warning shot of 100,000 barrels per day fell on deaf ears and the alliance may now be prepared to cut by 10 times that, even 20 if some sources are to be believed.

Adding to the uncertainty is the prospect of a group cut backed up by additional unilateral reductions, which could significantly reduce supply and push prices back towards triple figures. With consumers only just breathing a sigh of relief after being forced to pay record prices at the pump, today’s cut is not going to go down well.

Gold bouncing back but facing resistance

We’ve seen a strong recovery in the gold price over the last couple of days but it may need another helping hand to build on that. That will likely require the assistance of lower US yields and a softer dollar which will depend heavily on the incoming data, most notably Friday’s jobs report. Considering the response to Monday’s manufacturing PMI, a weaker services PMI today could also boost the yellow metal.

The next big test for gold is obviously $1,800, but it could face some resistance along the way around $1,740 and $1,760. A pullback could see sentiment tested around $1,700 and $1,680.

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

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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