Oil and gold suffer as USD shines

Time for OPEC+ to step up

It should come as a surprise to no one that reports of lockdowns in Europe is weighing heavily on oil prices as we move into the dreaded winter period.

Perhaps the severity at this stage is catching some off-guard which is what led to prices somehow holding comfortably around $40 since late in the summer. That confidence is no more and restrictions across Europe and the US are only going to head in one direction in the weeks ahead.

With the demand side of the equation delivering a blow to oil prices, it’s up to the suppliers to even things out if they don’t want to see oil back in the low to mid 30’s. OPEC+ has signaled a willingness to act, if necessary, and this is a warning by the markets that the time has come.

A two million production increase in January is now surely off the cards, but more may be needed if prices continue to plunge as they have. I expect we’ll hear more from OPEC+ before the December meeting.

Gold eyeing post-summer lows

The dollar has been a reliable safe haven this year and trading in recent days suggests nothing has changed.

The greenback is staging another impressive recovery and has its eyes set on the post summer peak. This has been a real drag on gold, which had been in consolidation in recent weeks.

Unfortunately for the yellow metal, just like the risk assets it has aligned itself with, it has been hit by the double whammy of surging Covid cases and failed stimulus talks. It’s now comfortably back below $1,900 and the late summer support around $1,850 is now looking very vulnerable.

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.