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Oil crushed on recession fears, gold steadies

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Oil pares losses after Powell testimony

Oil volatility will remain elevated now that opposing opinions are emerging on where prices will finish the year. ​ Oil prices are under pressure as global recession fears accelerated crude demand destruction calls. ​ Inflation and growth concerns won’t be improving anytime soon and that has all the short-term drivers turning negative for the crude demand outlook.

Citigroup’s Morse is expecting oil to fall to the USD 80s by the fourth quarter, while Goldman’s Currie is sticking to his supercycle call for oil, noting that it has the potential to get tight over the next three to six months. ​

Fed Chair Powell’s testimony to Congress is keeping the inflationary focus for financial markets and will keep traders expecting more rate hikes as they try to tame inflation. ​ Crude pared losses as risk appetite returned following Fed Chair Powell’s testimony. ​

Gold

Gold prices steadied as doom and gloom has taken over Wall Street. Fed Chair Powell’s testimony was a reiteration of the Fed’s commitment to bring down inflation with aggressive rate hikes that may send the economy into a recession. All the economic data is starting to show a weakening economy that will drive up demand for safe-havens.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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