Crude prices initially surged as China’s fight against COVID appears to be headed in the right direction, but gave up a good amount of gains after US officials signaled that the strategy on Russian crude could switch from embargo to tariffs. If the West decides to slap tariffs on Russian crude instead of an embargo, that would keep supplies on the market, which should put a cap on the recent crude rally.
The oil market remains tight but if the EU embraces the strategy of putting tariffs on Russian crude instead of phasing them out, the rally in oil prices might show some exhaustion here.
Gold gains as dollar dips
Interest rate differential expectations have narrowed and that has sent the dollar lower, which has given the greenlight for gold investors to buy the dip. Gold is following the broader market rally and is now comfortably above the USD 1800 level, which could trigger further technical buying. It seems the dollar is finally ready for a pullback and that could last a couple days if risk appetite continues to show signs of getting its groove back.
Gold pared gains as Treasury yields surged higher after earnings and a retail sales report suggested the consumer is still strong and that is leading to expectations that the Fed won’t have to ease up with tightening policy.
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