Profit-taking ahead of CPI data
Oil prices are a little lower at the beginning of the week. Last week saw them bounce back strongly on optimism around China’s economic recovery, post Covid transition. We are perhaps seeing some profit-taking now ahead of tomorrow’s inflation report which could have a big impact on sentiment one way or another.
Another favourable inflation report could see oil test the highs of December and January around $82 in WTI and $89 in Brent. They haven’t been able to break that barrier yet despite the optimism around China but the prospect of a lower US terminal rate and soft landing could be enough to break through.
Gold is struggling a little on Monday, off more than half a percent and hitting its lowest level since early January. The correction it would appear is ongoing, with $1,820-$1,830 the next test of support, followed by $1,780-$1,800 which still looks more interesting. Ultimately, whether it remains in a corrective phase probably depends on tomorrow’s inflation data and it could take something much lower for it to bounce back, following the January jobs report.
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