Oil and Gold vulnerable after Monday declines

Oil pares losses, for now

Oil prices are recovering some losses after coming under heavy selling pressure on Monday at the prospect of renewed lockdowns.

Adding downward pressure to the oil price could be the addition of Libyan crude, with the country potentially adding around half a million barrels per day by year-end, although forecasts naturally vary.

An interesting battle could emerge in the coming weeks, with the Saudi Energy Minister Prince Abdulaziz bin Salman warning traders against shorting oil prices, but that seemingly fell on deaf ears as the market tumbled. Should it continue, OPEC+ may be forced to reconvene and increase cuts again in order to address the decline.

Gold under pressure

Gold is hanging above $1,900 for now but has come under significant pressure in recent days as the dollar jumped in a risk-averse environment.

The dollar has performed well this month and a break above the August highs could trigger a sharper rally and weigh further on the yellow metal, potentially sending it back to the August lows and even further still.

Trading yesterday once again suggests precious metals are no safe haven, when Covid is concerned, another factor that could support dollar in the near to medium term.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.