Oil Correction Continues, Gap Filling Possible
Oil price continues it's downward trend following a 2% drop on Wednesday, with prices moving below post-OPEC+ cut lows from a few weeks ago. The sudden announcement of this cut left a void that oil has now entered. The question remains whether the gap will be filled, as the high from the previous Friday was just shy of $76 in WTI and $78 in Brent, requiring a drop of roughly 3%. However, this would only take the price back to the middle of the range that oil had been trading in for months before the SVB collapse.
Gold Bounces Back, Possible Fed Boost
After falling back toward $1,970, gold prices rebounded on Wednesday, reaching just above the $1,940-$1,960 region, a significant support level. Although there is a possibility of further downward pressure if yields continue to rise, the market has experienced a slight stall due to recent rebounds. With markets still adjusting to the aftermath of the mini-banking crisis from last month, it is evident that we are still far from being in the clear. As the full ramifications of the crisis become apparent in the credit market and economy, we may see a significant adjustment in interest rate expectations, bond markets, and gold prices.
The Future of Oil Prices
The future of oil prices remains uncertain as we continue to see a correction in prices. While a gap filling is possible, it would only take oil back to the middle of the range that it had been trading in for months prior to the SVB collapse. The effects of the OPEC+ cut and the market's reaction to it have left oil prices vulnerable to a correction. The prices will largely depend on how the market reacts in the upcoming weeks.
The Future of Gold Prices
The future of gold prices is uncertain due to the recent mini-banking crisis that occurred last month. The market is still adjusting to the full ramifications of the crisis in the credit market and the economy, which may result in significant changes in interest rate expectations, bond markets, and gold prices. If adjustments result in much lower rates, record highs may be achievable.
Oil and Forex
Forex traders should keep a close eye on oil prices, as changes in oil prices have a significant impact on currency values. The correlation between oil prices and the value of currencies is not always straightforward, but in general, a rise in oil prices leads to an increase in the value of currencies in oil-producing countries, and a decline in oil prices results in a decrease in the value of these currencies. Additionally, fluctuations in oil prices often result in changes in inflation and interest rates, which have a significant impact on forex markets. As such, it is essential for forex traders to keep a close eye on oil prices to make informed trading decisions.