Oil could go much higher
Oil prices have hit their highest levels since early March as Europe continues to work towards a Russian embargo and China looks to ease Covid restrictions. The lockdowns have offset some of the concerns over supply disruptions amid Russian sanctions following the invasion of Ukraine. The lifting of restrictions could be another bullish catalyst for crude.
With oil prices now at or above their recent range highs, the question becomes just how much further they’ll go and how uncomfortable it’s going to get. Both from an economic and monetary policy standpoint. The next test for Brent is USD 120 but let’s face it, a full reopening in China and an EU embargo could see prices rise much further.
Gold seeing support for now
Gold is marginally higher this morning after ending Monday in positive territory. Another brief dip below USD 1,800 didn’t cause too much of a wobble but I don’t think traders are rushing back in either. The yellow metal has seriously fallen out of favour despite ongoing inflation concerns as central banks attempt to make up lost ground.
Even widespread risk aversion isn’t helping gold and a much stronger dollar is making life very hard for it. If we are seeing a correction or even a recovery, the first test is USD 1,850 where it saw support earlier this month. Another break of USD 1,800 could be painful despite two successful defences of it so far.
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