Oil swimming against the tide

The rebound in risk appetite today is lifting oil prices a little but it’s already faces stiff resistance.

A rally in oil may feel like swimming against the tide in the near-term, with rising Covid cases and restrictions likely to weigh on economic activity and therefore demand. Barring another intervention from OPEC+, which is looking increasingly likely at some point, the path of least resistance is downward.

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And with the dollar shaking off the remaining bears and hitting two months highs, the headwinds are only growing.

Gold facing significant downside

The near-term outlook for gold is looking worse by the day, with the yellow metal breaking $1,900 just as the dollar hits a two month high, taking out key resistance along the way.

The bear-case for the yellow metal has been building for some time, with the dollar threatening a correction but just failing to gain the momentum at the right time. Now that it appears to have gathered that support, gold could retreat much further, with $1,860 the next test but $1,800 perfectly feasible.

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