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Oil rebounds, gold above 1800

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Oil shines on Pfizer approval

Crude prices roared back after the Pfizer COVID vaccine got full FDA approval, opening the door for more vaccine mandates which will help get the US to herd immunity.  The crude demand outlook will get a boost here now that the delta variant appears to be peaking in the South and as China lowers local COVID cases to zero.

WTI crude prices should be supported going forward as the selloff was overdone and as stockpiles continue to shrink.  Oil prices could quickly rally back to USD 70 if the Fed does not send the dollar higher by formally committing to tapering its asset purchases.

Gold

Gold is starting to look very attractive again as Treasury yields remain grounded over expectations that the Jackson Hole Symposium will show a wait-and-see approach before committing to tapering asset purchases.  Cases are spiking in Wyoming and that has triggered a code red which restricts meetings.  Jackson Hole will be virtual again and that makes it unlikely the Fed will want to signal they are ready to slow the pace of asset purchases.

The Fed’s Minutes signalled a taper announcement will happen this year, but delta variant risks will likely make Jackson Hole a somewhat dovish event.  The Fed may make a taper announcement in September or November, but it will probably be a slow taper with no commitment over interest rate hikes.

The USD 1850 level is everything for gold and if after the Jackson Hole Symposium, prices can’t make a fresh August high, bullion investors might be quick to the sidelines.  Gold should start to form a trading range around the USD 1800 level leading up to Fed Chair Powell’s Friday speech.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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