Oil prices bounced back well at the start of the week, as choppy trading conditions were seen across various asset classes. Brent is trading back around $90 a barrel after briefly dipping back towards the lows of the last six months where we continue to see substantial support.
OPEC+ fell short of its output target by 3.583 million barrels per day in August in a further reminder to the markets of the tight conditions we continue to operate within. It also highlights how irrelevant the 100,000 barrel increase and subsequent cut really were. Still, I expect more warnings of output cuts if prices do break their six-month lows.
A troubling week for gold
It hasn’t been the best week for gold, although it did manage to find its feet a little over the last couple of sessions. Still, it could be in for a lot more turbulence this week considering the scale of tightening that’s coming on Wednesday and Thursday, alone.
If the Fed takes the plunge with a 1% hike, it could turn into a very unpleasant week for gold. It’s run into resistance around $1,680 over the last couple of sessions which makes sense from a technical perspective, being such a long-standing level of support. We may see it linger below here in the run-up to the Fed decision amid fear of a nasty rate surprise.
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