Oil back above USD 100, gold shines

USD 100 oil is back and it is probably going to stay.  The crude correction ended now that the market has mostly priced in the strategic petroleum release plan, China is beginning to lift some of their lockdowns and as negotiations between Russia and Ukraine appear to have hit a dead-end.  The energy market expects to remain very tight from the summer and if geopolitical risks remain elevated, USD 100 oil should easily hold.

The latest inflation report gave a boost to risky assets as Wall Street became optimistic that surging prices may have peaked. A potentially less aggressive Fed later this year is good news for commodities and that helped crude prices extend gains.

Gold rallies after inflation report

Gold prices rallied as Treasury yields declined following a cooler-than-expected inflation report that could signal the peak is in place. Inflation rose at the fastest pace since 1981 and Wall Street is breathing a sigh of relief that inflation was not scorching hot today.  Core price increases are slowing and investors are hoping that could mean the Fed may not need to maintain an aggressive monetary stance beyond the summer.

For gold to rally above the USD 2,000 level, US Treasuries need to extend their retreat, with the 10-year yield making a run below the 2.55% level. The Fed has a good chance to contain inflation and that should help bond yields stabilize, which is good news for gold bulls.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya