Oil dips ahead of OPEC+, gold flat

How influential is Biden in OPEC+?

Oil prices are slipping again on Tuesday as traders take a more cautious stance ahead of the OPEC+ meeting. There’s a lot more uncertainty this time around as they’re no longer on a pre-set path that people were hoping would change but never really did. The decision this week will tell us just how unified the group still is, how committed it is to rebalancing the market and whether President Biden has any influence in the cartel at all.

There have been reports that Saudi Arabia will put forward a case for higher levels of production at the meeting after making assurances to President Biden. Of course, that won’t necessarily translate into an agreement on higher output, with the priority remaining the unity of the alliance. And let’s not forget that the group is still incapable of delivering on what it’s already agreed. So unless Saudi Arabia and the UAE are going to do more heavy lifting, any deal may have little impact on the situation.

Can gold push on from here?

Gold is relatively flat on Tuesday after securing a fourth consecutive day of gains at the start of the week. The yellow metal has been buoyed by the moves we’ve seen in bond markets, the shift to a less hawkish stance by the Fed and the pullback in the dollar. The threat of recession and the potential realisation that the stock market is just experiencing another bear-market rally may also feed into further gold strength.

The next big test to the upside falls around USD 1,800 although it could see some resistance around USD 1,780 where it appears to have stumbled this morning. A corrective move to the downside could see support arrive around USD 1,750-1,760, as we’ve seen in the past. It all depends on how much further yields can fall given inflation is still high and more tightening is almost inevitable.

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

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