Oil rebounds as Saudi Arabia boosts prices
Oil prices are bouncing back on Monday, up more than 2% after coming under significant stress last week. Reports of Saudi Arabia raising crude prices are apparently behind the move, although I’m not entirely convinced. Sure, it portrays confidence in the markets but it doesn’t alter the uncertain outlook in any way. I think it’s probably just a risk rebound as we’re seeing elsewhere.
Ultimately, the most bullish thing for prices is that Omicron is reportedly less severe and if more good news follows, we can all relax a little and the downside risks to the economy will abate. If the good news doesn’t follow, OPEC+ will pare back output and support prices that way. The question is how much the lows will be tested in the interim, if at all. Producers’ resolve has been tested before on many occasions.
Gold remains under pressure as USD creeps higher
Gold remains under pressure, as US yields at the shorter end of the curve and the dollar continue to creep higher. As is the case with every other asset class, the yellow metal will remain extremely sensitive to developments over the next couple of weeks as we learn how great a threat Omicron will pose and what the monetary response will be.
It’s found some support around USD 1,760 late last week where it has repeatedly done so since the middle of October. A move below here could see focus shift back towards USD 1,720 and then USD 1,680 which would be around the lows for this year.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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