Oil pares gains after larger inventory draw
Oil prices are a little lower on Thursday, pulling back after a strong three-day rally in risk-averse trade. A rebound of more than 10% in three days is some going and it seems some profit-taking is kicking in. We saw something similar yesterday but a larger than expected drawdown in crude inventories, reported by EIA, triggered another rally that saw it end the day on a strong note.
If we do see a sustained corrective move then USD 65 will be interesting in WTI, being the July and early August lows and the 50% retracement level of Monday’s lows to yesterday’s highs. We could see bargain hunters getting interested once more around those levels, should it get that far.
Gold hit by Bullard comments, recovers quickly
Gold has seen some profit-taking but has already found support around USD 1,780 today. The yellow metal was relatively flat on the day but hawkish comments from Fed member James Bullard nudged it lower as the dollar rallied. It’s already reversed the decline which could be viewed as a bullish signal, although plenty of resistance remains ahead.
Gold will naturally be highly sensitive to comments coming from Jackson Hole over the next couple of days, particularly those from Powell on Friday. A hawkish taper message from the Chairman could be the start of the end for gold’s ambitions above USD 1,800 while a step back in their plans could see it challenging those highs around USD 1,833 and even going beyond.
Bullard’s comments shook gold a little but it didn’t take long for those moves to unwind. He is a well-known hawk and his comments are well aligned with views expressed previously. Perhaps this is a sign of the nerves in the markets ahead of tomorrow’s main event.
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