Oil slightly higher, gold continues to drift lower

Oil settled into lower range but focus remains on banks and OPEC+

Oil prices were drifting lower earlier in the day but have recovered to trade modestly higher as we near the end of the trading week. It would appear traders are waiting for one of two events to dictate the path of travel going forward; another bank failure or an OPEC+ production cut. You could throw US debt ceiling drama and default into the mix but I’m only inclined to focus on remotely plausible events at this stage.

In the interim, oil appears to have stabilized in the lower trading range it briefly entered into in March, between $70-$78 in Brent or roughly $64-74 in WTI. A lower growth environment is seemingly expected now in light of recent bank failures and a less inspiring Chinese Covid recovery.

Has gold entered into a correction?

The gold rally and run at record territory is gradually deflating despite inflation data this week being respectable and pointing in the right direction. Despite it even coming in slightly better than expected, the yellow metal is drifting lower for a third day, perhaps a sign the trend was looking a little tired. Another run at record territory may well be on the cards at some point in the not-too-distant future but for now, the focus has turned to key support zones, the first of which is $1,950-$1,970, where price has faced pushback repeatedly in recent months.

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