Gold Price Analysis – Oil trader focus on OPEC – Higher dollar impacts gold
Gold prices took some serious beating yesterday, mainly because of more strength in the dollar index. In other words, rising US Treasury yields are taking the shine away from the precious metal. Gold price is trading at a very critical junction. It is highly likely that we may see the gold price breaking below the 1,700, which may unleash fresh bearish bets, which could drive the price towards the 1670 to 1660 price level. The reality is that the coronavirus recovery process is picking up some serious momentum because of the ongoing progress on the vaccine front in the US. The fact that 90% of US adults will be eligible for vaccine within in three weeks will further lift the prospects of strong economic recovery. No one really wants to favor gold prices under those circumstances.
As for the oil prices, the focus remains on the upcoming OPEC plus supply policy decision. Oil prices are likely to remain under pressure as the traffic improves near the Suez canal. As far as it goes for the OPEC supply decision, it is likely that we may see another extension of the current agreement. This could be due to the arrival of the third wave of coronavirus in Europe. But of course, there is always an element of surprise, and the cartel can always focus on the more optimistic side, and that is the ongoing progress on the coronavirus vaccine front. The best scenario for the oil market will be if the OPEC plus keeps the millions of barrels off the market as they are currently doing so. Saudi Arabia has indicated that it is prepared to accept an extension after current production cuts, and the country can bear the pain of lower oil production for some time.