Gold and oil rebound, bitcoin above $20,000


Oil pares losses ahead of next week’s OPEC+ meeting

Oil prices are recovering following the sell-off over the last couple of sessions. The prospect of a deeper economic slowdown, perhaps even global recession, has naturally turned traders more bearish on the price of oil as demand would naturally slump in those circumstances relative to prior expectations.

Of course, there is another side to that equation, supply. The message from OPEC+ earlier this month was quite clear; it stands ready to adjust supply if fundamentals change or volatility continues and prices no longer reflect the situation. While it has so far resisted the urge to hold an unscheduled meeting, the next showdown is next week so we should soon have a more updated view in light of everything we’ve seen recently.

In the meantime, we could see further pressure on oil prices if economic woes continue to dominate and traders want to test the resolve of the alliance in the face of severe global economic risk. In the midst of an inflation and cost-of-living crisis, you have to wonder why the group would want to keep prices artificially high in the short term as it will only make a global recession all the more likely.

Gold bouncing back but risks remain to the downside

Gold is rebounding after another terrible start to the week that saw it plunge back to $1,620, its lowest level since April 2020. It just goes from bad to worse for the yellow metal as traders continue to flock to the greenback and yields keep rising. The question for gold traders is how close are we to peak rate pricing and inflation. Obviously, the same question is being asked in all corners of the markets and so far, no one really has the answer.

With that in mind, it’s hard to build a bullish case for gold. Once we see signs of hitting that peak, we could see a recovery amid continued demand for safe havens. In terms of levels, it’s hard to say where that will come. The first test to the upside now is $1,640 followed by $1,650 and $1,680 but there still could be further pain ahead, with $1,600 being the next obvious test.

What’s driving the recovery in bitcoin?

Bitcoin is staging a remarkable recovery amid a mild reprieve elsewhere on Tuesday which will no doubt excite a crypto crowd after another rough period. Turmoil elsewhere appears to have lifted bitcoin which has largely traded as a high-risk asset.

This will undoubtedly stoke conversations about its role in the new economy, perhaps even reignite claims of its safe haven status. Naturally, I’m far from convinced but it’s certainly intriguing to watch unfold given the chaos we’re seeing elsewhere.

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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.

Craig Erlam

Craig Erlam

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