Oil easing after strong recovery
Oil prices are easing off slightly after making decent gains again on Thursday. We’re seeing risk coming off the table across the board today so it’s no surprise to see crude caught up in that. Oil has risen more than 12% over the last week and a half and is trading just shy of its July highs so it’s understandable that we’re seeing a little profit taking at the end of the week.
While sentiment has been dampened a little this week, the outlook for the recovery remains very positive so oil should remain well supported and I wouldn’t be surprised to see crude prices taking a run at those July highs next week. Whether it can overcome them may depend on whether investors can bounce back quickly after today’s declines.
Gold enjoying a good week but will inflation data change that?
Gold is trading flat today but it’s been a good week for the yellow metal. The Fed delivered a balanced but suitably dovish performance; encouraged by the recovery but cautious heading into the coming months. That should continue to suppress yields and keep gold well supported as it pushes against July’s highs.
A move above here could see it eye USD 1,850 which will be a key barrier. The 61.8 fib level could mark a very bullish turn for gold or a potential rotation point, with the moves perhaps nothing more than the final push in a broader corrective move from the early June peak.
I say all of this ahead of today’s US inflation numbers which could give gold a kick in either direction going into the close. A higher reading could trigger concerns about Fed hawks taking the upper hand and pushing for tapering earlier than is currently envisaged. Given sentiment in the market today, that could see the weekend start on a particularly sour note.
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