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Oil eyes OPEC+, gold under pressure

Started by PocketOption, Sep 08, 2022, 09:34 am

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Oil eyes OPEC+, gold under pressure


Calling OPEC+ bluff?

It’s not just the resolve of Japan's Ministry of Finance that’s being tested by the markets at the moment, with oil prices trading not far from their late summer lows despite the warning shot from OPEC+ earlier this week. While the 100,000 barrel cut wasn’t fundamentally significant, it was clearly intended as a warning not to drive the price lower or face further cuts. Unfortunately, it seems traders are in no mood to be told what to do and growth fears are instead dictating the price direction.

The question is how long will OPEC+ wait and how low will prices be allowed to fall before the alliance calls one of those emergency meetings it warned about? A move below $90 in Brent could be very interesting if traders hold their nerve for that long.

Gold looking vulnerable

A stronger dollar and higher US yields put a swift end to the gold recovery trade on Tuesday, with the yellow metal running into resistance around $1,730 where it had previously seen strong support. It doesn’t bode well for gold, with the dollar remaining a strong favourite and aggressive tightening still on the agenda for central banks. The next big test is $1,680, a break of which could signal a very bearish shift in the gold market and see it trading around two-year lows.

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