Oil claws higher, gold lifted by FOMC

Oil continues to edge back to previous peaks

Oil prices are continuing to gradually rise on Thursday. Strong earnings and a cautious US central bank bodes well for crude, which saw the rally slow heading into Fed day. Oil is now closing in on its early July high so we could see the rally slow in the coming sessions after a remarkable bounceback.

The price plunged around 15% in the two weeks that followed the peak but most of this lost ground has now been made up again. The biggest downside risk to oil prices now is unsurprisingly the delta variant rapidly spreading and weighing on the economic recovery going into the end of the year.

Gold breaks higher after the Fed

Gold saw some support in the aftermath of the Fed meeting on Wednesday but a breakout today has seen it really gather upward momentum. Now back well above USD 1,800 and with its sights set on the July peak around USD 1,833, things are about to get interesting again.

This falls around the 50 fib – June highs to lows – with the 61.8 fib falling just above USD 1,850. Should we get that far, this will be the big test. A break of this could be very bullish in the near-term for the yellow metal. With the dollar a little soft and the Fed keeping yields low, gold could get some love once more.

The FOMC policy meeting was a well-balanced performance from Jerome Powell, a reflection of the wide range of views that clearly exist at the Federal Reserve. Powell won’t have the easiest time navigating over the coming months but the outcome should be favourable for investors. Tapering is on its way but it won’t be rushed, a balance that suits the markets.

The committee now has time to better understand the impact the current wave of infections will have, see how the inflation picture evolves and gather more data on the economic recovery that has shown such promising signs.

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