Precious metals finish higher thanks to risk-off play, oil lags

Rising recessionary fears out of the US give safe haven a leg to stand on as investors flee to safety, while oil drops on larger than expected EIA surplus and dented demand.

Oil Source: Bloomberg

GOLD: Finishing higher as investors flee to safety

With equities plummeting, precious metals had a small leg to stand on, though the US dollar didn’t necessarily underperform in the FX market. As it stands, most of the main technical indicators for this pair are neutral, but there are recessionary risks rising, US rate cut likelihoods still expecting further cuts, and geopolitical tensions that while aren't in focus could easily resurface. More significant data awaits, and although it's out of the US and could affect the greenback, it'll also affect risk appetite and hence potentially result in a shift in appetite for the precious metal. The pair’s price is back above its 50-day moving average (MA) and hence above all its main long-term MA’s, but retail bias is unchanged at a heavy long 67%.

Gold Source: IG charts

Gold Source: IG charts

SILVER: Enjoying a higher finish back above its main long-term moving averages

Little different in the performance between gold and silver's price, for as it stands here too the main technical indicators remain relatively neutral, if not conflicted to say the least as short-term retracement brushes against more long-term bullish bias, as its price crossed back above its 50-day moving average but where the remaining main technical indicators are neutral. The retracement off the lows hasn’t resulted in a change in retail bias, given the bulk of those longs have been initiated at a higher price.

Silver Source: IG charts

Silver Source: IG charts

OIL – US CRUDE: Larger than expected surplus and recessionary fears keeps oil prices close to the lows

Energy Information Agency's (EIA) US crude oil inventories showed a larger 3.1M surplus following a 2.4M surplus last week and in contrast to an American Petroleum Institute (API) significant deficit of 5.9M on Tuesday. The net result for this energy commodity was a lower finish and pushing retail bias 3% higher to an extreme long 85% (closest we saw to that level in terms of long bias was back in 2017). Today's service Purchasing Managers' Index (PMI) figures mean less given the sector isn't as energy intensive as manufacturing, though the overall recessionary mood could worsen should sub-50 PMI figures be released, and with tomorrow's US Non-Farm Payrolls (NFP) closely watched no doubt.

Oil Source: IG charts

Oil Source: IG charts


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