Oil edges higher, gold rally continues

Oil edges higher into the weekend

Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ meeting next week. There’s been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards; the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year.

Brent continues to trade around the March to August lows having traded below here over the last week amid recession fear in the markets. We’re now seeing some resistance around $88, perhaps a sign that traders don’t believe OPEC+ will deliver a large enough cut to make a significant difference.

Encouraging but maybe not sustainable

Gold is making gains for a fourth consecutive day after a difficult start to the week. While the recovery has been encouraging, it’s hard to imagine it building on it in any significant way as that would probably require rate expectations to have peaked and inflation perhaps to have as well. While that may be the case, it’s hard to imagine pressure easing from here which may maintain pressure on the yellow metal for a little longer yet.

Key resistance to the upside lies around $1,680 and $1,700, with $1,620 and $1,600 below being of interest.

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

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