The outlook for oil has been focused on the perception of global demand. And for that, markets have been dependant upon the development of the omicron variant of COVID. As the perception of the impact of omicron has shifted, the outlook for oil has changed and now looks more positive. However, regarding the precious metals, the outlook has been struggling to make any headway in a recovery. If anything there is still a negative bias for continued correction.  

  • The outlook for oil has turned more positive as omicron fears have eased
  • Precious metals have found support from an easing of US dollar strength, but the more positive risk environment is not helping

The outlook for oil has become more positive

The initial fear of the uncertainty on omicron drove market volatility soaring higher and positive risk appetite flooded away. The oil price plummeted almost -12% on the first day of reaction, and then spent much of last week in choppy correction even lower.

However, early data on the symptoms are “a bit encouraging” (according to White House chief medical advisor Dr. Fauci). If the symptoms are less severe than the delta variant then markets have felt their fears may have been overdone. The negative impact on demand that was taken with the knee-jerk uncertainty move is likely to be less severe. Hence the oil price rally that we have seen this week.

Brent Crude Oil

Brent Crude has already rebounded over half of the November sell-off. The move looks in good shape and fundamentally could continue. There has been a limited reaction to the uncertainty created from Pfizer’s update on their vaccine’s efficacy to the omicron variant. Also, oil traders will be watching for newsflow on the Iranian nuclear development.

The big test is how traders react to any near term selling. On Brent Crude oil (MT5 code: UKOUSD) there is good support around $73.50. If a higher low can be formed around there then the prospect of continued recovery through the $77.80 resistance will grow.

Brent Crude Oil

Precious metals struggling

The recovery on oil is in contrast with the precious metals which have struggled to develop any meaningful recovery in the past week. 

The selling pressure in late November which came amidst a sharp strengthening of the US dollar and a spike higher in real bond yields has eased. There is a sense of respite as USD strengthening is on pause. 


However, with risk appetite swinging positively, gold and other precious metals have struggled to engage in recovery. 

For Gold (MT5 code: XAUUSD), the daily chart shows that any time the price moves into the $1790/$800 region, sellers are sitting ready to drag the market back lower. No traction can be found. There is a minor higher low at $1772, but even today, there is a lack of any buying conviction. Given the subdued technicals, there seems to be a bias towards a test of $1758 right now.


This lack of traction is also evident in Silver (MT5 code: XAGUSD), which has consolidated between $22.00/$22.60 for the past six sessions. Given that the market is again slipping lower in the past couple of sessions, we cannot rule out further downside towards a test of the crucial support at $21.40.


Once again, we see this pattern of struggle with Platinum (MT5 code: XPTUSD). The resistance at 953/964 has been a key barrier for the recovery as the market has fallen over today. 

Technically, we see the RSI falling over around 40 (as it did two weeks ago) which is a sign that selling into strength is still a key play. We would be looking for a retest of the recent low at 914 and potentially a move towards the key low at 889.40.