Time for some profit taking in oil?
Dollar strength could be quite the headwind for commodity markets which have been red hot recently.
The vaccine news has turbo-charged the rally and oil has had an extra kick from the actions of OPEC+. With so much good news priced in and near-term risks piling up, it wouldn’t be surprising to see some profit taking kick in.
That’s not to say I think oil prices will fall heavily, not with the OPEC+ backstop in place. But after a phenomenal run in recent months, we may see it pull back a little.
Even still, crude will remain in very healthy territory, safe in the knowledge that should the situation require it, the group will act to support the market in the near-term and the vaccines in the longer.
Gold falls hard once again
After such a bright start to the year, gold has experienced a mass exodus, traders abandoning ship as yields rose and the dollar bounced back.
Just as the yellow metal was gathering some momentum, it reversed course sharply, smashing through $1,900 once more in spectacular fashion.
Gold found some support around $1,820 but continues to look vulnerable after such heavy selling. It could be a pivotal week for gold, with so much Fed speak in the coming days.
Should policy makers opt against talking down the rising yields, or just fail to convince, gold could be in for more tough days, with the late November lows potentially in sight.
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