Oil steadies, gold eyes resistance

Oil steadies after strikes in Poland

Oil prices are softer on Wednesday after a brief bout of volatility late Tuesday following reports of missile strikes in Poland. That unsurprisingly jolted financial markets, sending oil prices higher initially, but that quickly settled and crude prices are now back where they were before.

It goes without saying that any significant escalation in the war in Ukraine will likely add a substantial risk premium to oil prices, with Russia being a major producer and exporter, as well as one of the leaders in the OPEC+ alliance. A strike on a NATO member is an extreme example of that and could send oil markets into a frenzy. Thankfully, the worst fears haven’t been realised but investigations are still taking place which will keep oil traders on edge.

Gold battling resistance

Gold is struggling to take the next step higher after struggling around $1,780 once again today. That’s not overly surprising considering this was a major level of support from January to July, at which point it gave way in style losing almost 4% in less than 48 hours.

What’s encouraging is that it’s not showing signs of easing up. Pullbacks have been minimal and pressure remains to the upside. A break of $1,780 could be the catalyst for another spike and ease any doubts about the sustainability of the rally in the process. Assuming both US inflation releases haven’t done that already.

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