Oil bounces back, gold slips after CPI report

Oil bounces back amid more favourable developments

Oil prices are staging a comeback today, perhaps buoyed by the softer inflation data which may open the door to the end of the Fed’s tightening cycle and enable the soft landing it always hoped for. That said, there may be a technical element to it as well, with the price having traded around its 2023 lows in the run-up to the release.

There was always likely to be two bullish cases for crude and this only slightly aids one of those. Another unified move from OPEC+ could have been that but instead, the Saudis were forced to go it alone. The other was a stronger economy which has looked increasingly unlikely recently but positive inflation reports from the US and eurozone and a rate cut in China certainly help that case. There’s still a long way to go.

Gold traders seemingly not so upbeat

Gold isn’t aboard the Fed pause train yet though, in fact, it slipped after the inflation report which may suggest not everyone is on the same page. This may be a reflection of the still stubborn core inflation number that while enabling no more hikes could keep rates higher for longer. But clearly, what the Fed does and says tomorrow could play a big role in whether we see a breakout from the range gold has traded in over recent weeks. Based on today’s response, traders may not be feeling so upbeat. The question is will the Fed change that or compound those fears?

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

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.