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MTrading Team • 2023-07-07

Experts Expect Oil Prices to Go Higher and Support Gold

Experts Expect Oil Prices to Go Higher and Support Gold

Analysts believe the oil price will move up to support gold and drive inflation fears at the same time.

On the one hand, production cuts initiated by Russia and Saudi Arabia to support prices managed to provide momentum for oil prices. They also supported the gold market in some way. On the other hand, current oil prices are quarterly lower compared with the same period a year ago.

Nevertheless, experts predict, there is an opportunity for the oil price to jump higher. It is going to happen right before the inflation fear will bring another momentum for gold and silver.

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To support this forecast, WTI crude oil prices have been showing some solid gains with a 3% lift the previous day. It happened after Saudi Arabia announced another production cut by 1 million barrels/day. Russia did the same, reducing its oil production by 500 000 barrels per day.

Meanwhile, precious metal prices keep flirting. After bouncing off the $1,9000 support last week, the initial resistance was around $1,930 per ounce. Gold futures for August were last traded at $1,931 per ounce.

We can say that rising oil prices provide support for precious metals and gold in particular. However, experts believe that a 3% move will hardly be enough to drive inflation fears.

While the world is about to face recession threats, some analysts do not see any reason for the oil price to move further. As for the yellow metal, it is still highly correlated with bond yields and mainly in a negative way.

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