Oil edges higher off lows
Oil prices are marginally higher on Tuesday after once again seeing strong support around early November lows. We’ve seen the rally lose momentum recently as growth slows in the final quarter of the year, OPEC revises down demand growth and the White House threatens to release reserves from the SPR.
We’ve seen some incredible gains in the oil price this past few months as OPEC+ has resisted raising its output target, despite mounting pressure from consuming countries. Higher oil prices are contributing to inflationary pressures and are another headwind for the economic recovery this winter.
We could see prices pull back a little further if the economy continues to slow and rising virus cases further weigh on demand, as OPEC+ has anticipated, but this remains a bullish market and I expect dips continue to attract plenty of interest.
Gold rally losing momentum ahead of retail sales
Gold is pushing higher once again, supported by higher inflation indicators which continue to push down real yields. The yellow metal is traditionally viewed as a hedge against inflation and that’s exactly what we appear to be seeing now. The last couple of weeks have delivered strong gains for gold which now has its sights set on the summer highs above USD 1,900.
We shouldn’t get too carried away yet though. It’s up more than 5% from its November lows and quickly losing momentum, which should catch up at some point. Of course, it could regain momentum, say following the US retail sales report today, but recent trading suggests it’s running out of steam and a correction may be on the cards.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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