Crude prices edged lower as a section of the Keystone pipeline restarted and as global recession risks increased after a wave of central banks delivered another strong round of tightening. Oil’s recent rally is running out of steam as risk aversion runs wild. The dollar might be poised to rally here and that should keep some pressure on oil prices.
Gold is weakening as markets worry that global central bank tightening will drive recessionary fears and keep the dollar supported here. Traders are still digesting all the Fed and ECB actions and that should ultimately still have a little room for rates to rise but the peak is getting close to getting priced in.
Gold’s decline below the $1800 level triggered technical selling that stalled out just before the $1780 region. Gold will eventually resume its safe-haven status, but first we need to see more traders convinced that the Fed won’t follow through with their hawkish threats.
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