Oil hit by higher inventory numbers
The oil price correction has accelerated on Wednesday on the back of inventory data from API and EIA which showed larger than expected increases last week. The numbers may have come at just the right time as well, with the rebound starting to run into resistance again a little shy of last week’s highs.
Perhaps this is the clearest sign yet that we’re going to see a deeper correction after the recent dip was quickly bought up after just a couple of days. A move below last week’s lows could see Brent and WTI slip below USD 80 for the first time in almost a month. I don’t think it will be long before support arrives again though unless OPEC+ surprise us all tomorrow and raise production targets.
Gold slipping ahead of the Fed
Gold is coming under heavy pressure ahead of the Fed meeting, perhaps the clearest indication that traders fear a possible hawkish shift from the central bank. All it will take is a slight tweak for traders to interpret at least one rate hike is being lined up for next year. A dropping of the reference to inflation as transitory, for example, even if replaced by something that still indicates they believe it will correct itself over time.
That may be what gold traders are anticipating as the dollar is relatively flat on the day while US yields are only a little higher. Gold has been struggling for days in the run-up to this. Repeated failures to break and hold above USD 1,800 has chipped away at sentiment and it would appear it’s finally caved. It’s finding some support around USD 1,760 but that may not last if the Fed turns more hawkish later on.
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