The easy oil trade that everyone loved for much of the first half of the year has disappeared as the fundamentals have gotten quite mixed. The OPEC+ decision to maintain the planned 648,000 bpd oil increase in August went as expected, but traders are focusing more on President Biden’s trip to Saudi Arabia. Biden is going to try to get the Gulf alliance to pump more crude and if he is successful, oil could tentatively test below the USD 100 level.
The demand outlook might be deteriorating as gasoline usage has disappointed despite nice weather for the start of the summer driving season. The consumer is struggling with widespread inflation, so five-dollar gasoline will mean shorter trips and possibly less travel for many households.
Gold’s struggles continue
Gold’s poor quarter could not end fast enough. Gold has struggled as a relentlessly strong dollar was driven by aggressive Fed tightening calls that triggered rising recession fears. Even with the Fed’s favorite inflation gauge falling a little faster than expected, no one should confidently be saying that the peak inflation is firmly in place.
If it gets uglier for gold over the next week of trade, it should have major support at USD 1785 and that could hold as the dollar peak might be in place.
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