Markets testing Saudi threats
The pessimism in the markets is filtering through to oil where prices have fallen 2% again on Thursday. I’m not sure Saudi Arabia expected markets to test their nerve so quickly but it seems the suggestion that a reduction next week won’t be considered has removed the production cut risk for now.
It will be interesting to see how much traders decide to test the alliance, something that may invite more verbal intervention and perhaps even a change of heart ahead of the meeting. For now, Brent and WTI are edging ever closer to their August lows.
Gold may be eyeing July lows
After breaking below $1,730 support earlier in the week, gold is now pushing below $1,700 and could have the July lows around $1,680 in its sights. The yellow metal did not take Jerome Powell’s comments at Jackson Hole very well and has been on the decline since. It’s off around 3.5% from the highs of last Friday and a break of $1,700 could see it come under further pressure. The key test is $1,680 though and a break of this could be a very bearish development.
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