Oil slides amid Chinese restrictions
Oil is off around 3% on the day, with Brent back below USD 100 and hitting its lowest level in almost four weeks. There has been a big effort to alleviate the pressures in the oil market in recent weeks which has no doubt helped but it’s the lockdowns in China that are driving the latest declines.
The country’s zero-Covid policy is naturally having a dampening effect on demand which is aiding the rebalancing efforts. Of course, this is just a temporary demand hit so the upside risks to the price remain but it is offering some reprieve for now. How widespread the restrictions become and for how long will determine the sustainability and severity of the declines.
Gold pares gains after facing resistance once more
Gold is up a little on the day but has given back the bulk of its gains from earlier in the session. Once again the yellow metal has run into resistance around the same region it did a few weeks ago and a recovering dollar has also weighed on it around those levels.
If it can break beyond here – an impressive feat considering we’re still seeing yields rising – then USD 2,000 becomes the next big test. Whether it’s inflation fears or risk aversion driving the move, we’re certainly seeing gold coming back into favour. Not that it ever really fell out of favour, even as risk appetite returned and interest rate expectations were ramped up considerably.
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