Oil holds firm around $40
Oil prices recovered slightly on Tuesday but are under a little pressure again today.
Under the circumstances, it’s perhaps surprising they’re being as resilient as they are given that much of last week’s rally was driven by temporary factors that have since resolved themselves. We seem to be edging ever closer to lockdowns across Europe which is a downside risk for oil, while US cases may pose a threat as well.
Saudi Arabia and Russia are keen for members of the OPEC+ group to abide by past output agreements in order to maintain prices at an acceptable level. The pressure we’ve seen on prices since September may force memebers to meet before December, especially if compliance becomes a broader problem.
Gold continues to hover as risk events unfold
Gold is continuing to hover around the $1,900 level, where it has been consolidating around in recent weeks.
There are a huge number of major risk events in the coming weeks that should determine how it ends the year and we could just see it consolidating as we await for these events unfold.
The near-term risks are tilted to the downside for gold but sentiment has appeared to improve in recent weeks, which could make the coming sessions quite interesting. If things get worse before they get better – pandemic, stimulus, election uncertainty, Brexit etc – this could drag on gold a little more and put pressure on $1,850.
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