FX.co ★ 27.06.2022: Gold likely to edge lower. Outlook for oil, gold, and RUB.

Boris Johnson made a number of statements, including ones about Russian energy, which acted as a driving force behind a rally in oil prices. According to the British Prime Minister, the West will definitely end its 'addiction' to Russian oil and gas. However, this process will not be easy as other sources of supplies still need to be found, he added.

In other words, despite the already imposed sanctions and restrictions, Europe has not yet found alternative supply options. This means that Europe's negotiating position is weak. Indeed, the European Union agreed to ban most Russian oil imports by the end of the year. Obviously, potential suppliers will inflate prices as time is against Europe. Now let’s take a look at the oil price chart and try to determine its further dynamics. Brent crude oil futures have been sliding as part of a correction for the second week in a row. As a result, oil prices have already lost about 15%. This is a significant price change, but given the asset’s medium-term growth, the current correction fits into market cycles. Thus, sellers are expected to face the following support levels: $105 per barrel, where the price has already started a pullback, and the psychological level of $100, a likely target of traders. On Friday, gold gained value and won back some of its early losses. From a technical point of view, the asset saw a technical rebound. Today, the yellow metal kicked off the new trading week with a gap up. However, its bullish run was short-lived as the quote almost immediately turned negative. In this situation, due to market uncertainty, it is worth considering two possible scenarios at once. The first scenario suggests a downtrend. If the price fixes below 1,830, the metal will most likely reverse and head for the low posted last week. The second scenario implies a continued upward move towards the price gap. In this case, consolidation above 1,840 will open the way to the level of 1,847. The number of factors putting pressure on gold has increased. Uganda announced that it had struck a deposit of gold ore, with extractable pure gold estimated to gross 320,000 tonnes. For comparison, it is estimated about 160,000 tons of gold have been mined throughout history. Of course, these reserves still need to be confirmed. Even if at least a tenth of the declared amount is confirmed, gold prices will suffer losses. The very prospect of a surge in supply limits the asset’s upside potential. Moreover, it creates preconditions for a steeper fall in the value of the yellow metal. Meanwhile, the situation with the ruble remains unchanged. The dollar is continuing its efforts to break below the mark of 52 rubles, but its attempts have been futile so far. This clearly indicates investor sentiment. Thus, the ruble is expected to extend gains until the Bank of Russia begins to take more active steps to ease its monetary policy.

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