Oil prices test Two-week price gap as selling pressure increases

Disappointing data puts pressure on oil prices

By Laila Eid | @Laila Eid | 20 April 2023

  • Oil prices have fallen again, reaching levels of $77

  • Selling pressure continues to dominate the gold market

  • Tesla's quarterly profits were disappointing

Gold fails to stabilize above $2000 per ounce as market sentiment shifts

The recent surge in gold prices above $2000 per ounce has been short-lived due to changes in market sentiment, leading to profit-taking and further corrective movement in the yellow metal. Despite being close to record highs, the price of gold has not been tested on this occasion.

This trend is occurring at a time when expectations for a US interest rate hike during the May meeting have risen by 25 basis points, and the possibility of a hike has reached 80%. This increase has significantly strengthened the US dollar against most currencies and commodities, causing pressure on dollar-denominated assets, particularly gold.

In summary, gold's inability to stabilize above $2000 per ounce highlights the impact of changing market sentiment and expectations for a potential US interest rate hike. These factors have created pressure on gold and other dollar-denominated assets.

Oil prices drop nearly 2% and test two-week gap after OPEC+ cuts production

Oil prices have fallen by nearly 2% today and tested the open gap from two weeks ago, marking the first time in this period. This decline follows OPEC+'s unexpected decision to cut production over the weekend, which had pushed prices to their highest levels in recent months. However, the selling pressure has intensified in the past two days due to Chinese industrial production data and expectations of more stringent interest rates.

In the UK, interest rates are expected to rise to their highest levels, while in other regions such as the US, there may be fewer interest rate cuts later this year. If West Texas crude oil breaks through the $79 level, it could be a significant development, with Friday's highest price just slightly below $76.

Overall, the recent decline in oil prices reflects the impact of several factors, including OPEC+'s decision, selling pressure following Chinese industrial production data, and expectations of more stringent interest rates. These factors will continue to influence the oil market in the coming weeks.

Disappointing earnings results lead to decline in US stocks, including tesla

The latest round of corporate earnings has caused US stocks to decline, with Tesla's shares falling more than 20% compared to last year due to a decrease in net income and earnings per share. In pre-market trading, Tesla's shares lost more than 7% after the electric car manufacturer reported a more than 20% decline in both net income and earnings per share on an annual basis.

The disappointing earnings results have had a broader impact on the stock market, with futures contracts for stocks declining on Thursday morning. The decline was particularly notable in the technology sector, which was hit hard by Tesla's results.

Overall, the decline in US stocks reflects the impact of disappointing earnings results, particularly in the technology sector. As the market continues to evaluate new rounds of corporate earnings, it is likely that we will see further fluctuations in stock prices in the coming weeks.