Oil extends gains, gold eyes US CPI

Hurricane Nicholas lifts oil prices

Oil prices are rising once more, with WTI still sitting comfortably above USD 70 after recording two days of gains. The OPEC monthly report on Monday gave an encouraging assessment of crude demand this year and next, with the only glitch coming in the fourth quarter as a result of the Delta variant. But with demand seen exceeding pre-pandemic levels in 2022, things are looking up which should keep OPEC+ taper plans on schedule while continuing to chip away at inventories.

The US Gulf Coast is on high alert once more, as Hurricane Nicholas makes its way towards Texas. Coming so soon after Hurricane Ida caused havoc in the region, it seems oil traders are preparing for the worst. And with a couple more months of hurricane season still to go, prices may remain well supported.

Gold eyes US inflation data

Gold is back in consolidation as nerves grow ahead of next week’s Fed meeting. The yellow metal will remain sensitive to US economic releases this week, especially today’s inflation reading, with any delay to tapering being a positive catalyst in the coming weeks.

Gold did break back above USD 1,800 late last month but the rally ran out of steam quickly, as policymakers rushed to reaffirm their belief that tapering should begin this year. Some are still of the view that it should start asap so it seems many are unmoved by the weakness we’re seeing in the US data, most notably the shocking August jobs report.

Whether they’ll remain so entrenched if the data continues to display weakness, or if inflation pressures recede, is another thing. Fear that inflation may not be as transitory as is currently believed seems to be driving the rush to taper, even as the economic recovery loses momentum and Delta spreads rapidly.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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