G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market

G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market

Oil tumbles amid price cap talks and stricter Chinese restrictions

Oil prices are a little lower again on Thursday as the G7 continues to work towards a price cap on Russian oil. Brent crude fell heavily on Wednesday amid reports that the group could settle on a level around $65 which is roughly where they currently sell it at, and with a sizeable profit. That would blunt the effectiveness of the cap and ensure we don’t see any shortages in supply. But it may be what is necessary to keep all stakeholders on board, with some countries concerned about the domestic implications of a stricter cap.

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The discussions will continue but these reports have weighed on the price of oil at a time when restrictions, maybe even lockdowns, in China threaten demand in the world’s second-largest economy. And amid a report – since denied – that OPEC+ could boost output next week. I’m not sure what the motive would be at this point but perhaps it’s heavily conditional on the outcome of the G7 talks.

Gold buoyed by “dovish pivot”

Gold bulls very much welcomed the FOMC minutes on Wednesday and we’re continuing to see the price benefit today. The yellow metal has massively benefited from the “dovish pivot” last month if we can even call it that, as policymakers appeared to support a slower pace of tightening from next month, which was then backed up by the minutes.

It remains within a range though, with $1,730 providing support below – around the September and October highs – and $1,780 resistance above – a key area of support in the first half of the year.

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

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Oil prices slip, gold higher after FOMC - MarketPulseMarketPulse

G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market

Craig Erlam

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.