Oil rises, gold eyes 1800 level

Oil rises on reopening optimism

Oil is on the rise on Tuesday, extending solid gains from the previous session. Investors remain squarely focused on reopening optimism this week amid hopes that the easing of lockdown restrictions in the US and Europe will result in a rise in fuel demand.

Europe’s plans to curb travel restrictions is music to the ears of oil bulls. When added to Fed Chair Powell’s comments that the US economic recovery is making real progress, this is supportive of higher oil prices.

On the supply side, OPEC+ will start easing production cuts this month. However, given the improving demand picture, the market isn’t seeing this as a cause for concern.

Risks to demand remain, particularly as Covid numbers in India top 20 million and the opposition leader calls for a full-scale lockdown. For now, the market has moved past India and is focused on US and European reopening. However, we know the Covid picture is fluid and could keep gains in oil capped.

Attention will now turn to the API stockpile data later today.

Gold struggles at 1800 resistance

Disappointing ISM manufacturing PMI on Monday, along with a temporary dip in Treasury yields below 1.6%, saw gold kick off the week on a solid footing. The yellow metal found strong resistance at USD1800 – a level that is proving to be a tough nut to crack.

Today, gold is trading slightly lower, easing back from two-month highs in the previous session. A stronger US dollar and upbeat comments from Fed Chair Powell have taken the shine off the yellow metal.

Gold bugs will look ahead to US ISM NY Business Conditions Index, Factory Orders and trade data for further clues over the health of the economy, which has a strong bearing on gold prices.

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Sophie Griffiths

Sophie Griffiths is a market analyst with OANDA, focusing on the UK and Europe. With almost 15 years of experience, she brings with her a deep-seated understanding of the financial markets, providing timely and relevant fundamental analysis across a broad range of asset classes.

Sophie Griffiths

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