Oil slips on Chinese data, gold falls as rate expectations rise

Oil testing post-OPEC+ gap open

Oil prices are off almost 2% today and earlier tested the gap open from a couple of weeks ago. That came on the back of the surprise weekend OPEC+ output cut which propelled the price back towards the highs of the previous few months, where it has since hovered around.

Today’s sell-off comes on the back of some selling pressure yesterday following the Chinese industrial production data and slightly more hawkish expectations on interest rates. In the UK that refers to the higher terminal rate we’re now seeing while elsewhere like the US, it’s fewer rate cuts later in the year. A significant break of $79 in WTI could be very interesting, with the previous Friday’s high a little below $76.

Gold corrects as investors become more hawkish on interest rates

Once again, gold’s foray above $2,000 was brief as sentiment in the markets shifted, rate expectations became more hawkish and profit-taking kicked in. That meant record highs weren’t tested on this occasion – although it wasn’t too far off – and we’re now seeing more of a corrective move in the yellow metal.

Notable support can be seen around $1,940-$1,960, with $1,900 then being the big test below that. A break of this could signify a broader trend shift and much more hawkish interest rate expectations.

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

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.