Commodity wrap: oil flat as traders eye OPEC+ meeting; gold slips, while silver outshines

Oil prices remained flat on Thursday as trading volumes were thin due to the US Thanksgiving holiday. 

Gold prices fell from two-week high as investors continued to assess the likelihood of an interest rate cut by the US Federal Reserve next month. 

Silver prices also pulled back after hitting their highest level of $54 per ounce in a fortnight.

The metal was near its record high of around $55 an ounce. 

Oil flat

Oil prices were a touch higher on Thursday after spending the day mostly flat. 

Analysts said that the West Texas Intermediate prices have found some support at $58 a barrel. 

Traders were cautious as they assessed a possible peace deal between Russia and Ukraine, and the impact of Western sanctions on Russian oil supply. 

Senior US officials, including US envoy Steve Witkoff, are scheduled to go to Moscow next week. 

They will engage in discussions with Russian leaders concerning a potential strategy to resolve the conflict in Ukraine, which is approaching its four-year mark and is the most lethal war in Europe since World War II.

Despite a leaked recording showing a call where senior Russian diplomat Witkoff advised Moscow on presenting a peace plan to US President Donald Trump, Russia is still unwilling to make significant concessions on the plan, the diplomat stated on Wednesday.

“Should a peace treaty be agreed, then this should bring an end to sanctions on Russian oil exports (such as they were) and therefore boost supply,” said Trade Nation’s senior market analyst David Morrison.

Meanwhile, the Organization of the Petroleum Exporting Countries and allies will meet on Sunday to discuss production levels. 

The cartel is likely to leave output unchanged at the meeting. 

Morrison said:

Traders look to be positioning themselves ahead of Sunday’s OPEC/OPEC+ meetings.

Gold slips

Gold prices decreased on Thursday, pulling back from the near two-week peak reached in the prior session.

This movement occurred as investors evaluated the possibility of a US interest rate reduction in December.

Despite falling 5% since its record high of $4,381.21 on October 20, gold has largely remained above the significant level of $4,000 an ounce.

“Gold appears to be consolidating around $4,150. This is helping the daily MACD reset at lower levels,” Morrison said. 

This could be interpreted as a loss of upside momentum. Alternatively, it could be a precursor to another attempt to break above resistance around $4,200. Support comes in around $4,000.

At the time of writing, the COMEX gold contract was at $4,192.55 per ounce, down 0.2% from the previous close. 

Uncertainty surrounding the Fed’s stance on the schedule and extent of US interest rate reductions has driven a rapid increase in hedging activity, specifically involving derivatives linked to overnight rates and swaptions.

The prospect of a rate cut was strengthened this week by comments from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller. 

Consequently, traders are now anticipating an 85% chance of a rate cut next month, a significant increase from just 30% a week ago, according to the CME FedWatch tool. 

This environment is particularly favourable for non-yielding gold, which historically performs well when interest rates are low. 

Note that US markets will be closed on Thursday for the Thanksgiving holiday and will operate on a shortened schedule on Friday.

Silver

Silver has demonstrated strong performance this week, with prices rising overnight to nearly $54 per ounce—the highest level in two weeks. 

This surge puts silver close to its all-time peak of $54.60, recorded in mid-October.

“But for anyone concerned about the bearish significance of a double-top, they now must consider a triple-top as well,” Trade Nation’s Morrison said. 

Upside momentum is currently building in silver, as indicated by the daily MACD.

Silver is known for making large, sudden, and unexpected price movements, he added.

But whether that next big move is more likely to be up or down seems impossible to predict.

At the time of writing, the COMEX silver contract was at $53.020 per ounce, up 0.2% from the previous close.

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