Oil risks tilted to the downside
Oil prices are edging higher again today, looking for a third consecutive winning day after EIA reported a larger than expected drawdown on Wednesday.
This comes a day after API reported a much larger decrease, although that didn’t seem too detrimental. This very much looks like a corrective move though, aided by the large number of shut ins as Hurricane Sally arrived in the Gulf.
The longer-term outlook is still concerning, with IEA and OPEC this week lowering their growth forecasts, as Covid continues to wreak havoc on the global economy and as we head into a very testing winter. OPEC+ is unlikely to make any changes to output after the joint committee review today, given the state of the current environment and downside risks to the outlook.
Gold hanging in there after Fed disappointment
Gold is hanging on in there but the near-term risks are very much to the downside.
The yellow metal rallied into the Fed meeting and those positions quickly unwound as it became clear that the bazooka wasn’t making an appearance. The Fed probably lived up to the lower end of expectations but all that gets you is a healthy dose of profit taking.
With gold failing to overcome $2,000 once again, it may be looking a little bleak in the near term, with the path of least resistance possibly below. Suddenly $1,900 is looking a little vulnerable, with a dollar correction also potentially on the cards. It’s struggling to get going but if it can break the August highs, it may really take off.
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