Crude prices are edging higher as another day passes with no action from the Biden administration. The EIA short-term energy outlook forecasted higher gasoline prices until the end of the year and then for WTI crude to fall to USD 78 a barrel in December. The EIA report anticipates oil supplies will exceed demand throughout 2022, which seems a bit aggressive. If the Biden administration was waiting for the EIA to give them a good reason to tap the SPR this week, they did not get one.
WTI crude seems poised to make another run towards last month’s high of USD 85.41.
Gold prices are barely doing anything after no surprises with the PPI data and despite a plunge with Treasury yields as uncertainty over the Fed grapples markets. Normally yields in freefall would be bullish for gold, but that is not the case today.
A massive makeover the Fed could see Brainard running the show alongside a couple new dovish members. The reaction in yields might be a bit overdone as Brainard and Powell Both have similar views for monetary policy and support new flexible average inflation targeting framework.
If risk aversion is here to stay a while a longer, gold should start to see safe-haven flows. Inter-market analysis has been difficult post the Fed’s dovish taper announcement, but when the dust settles, it should be bullish for gold.
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