Oil plummets amid economic fears
Oil prices have been caught up in the doom and gloom of what we’re seeing in equity markets and after months of consolidation, economic concerns have triggered an aggressive breakout to the downside. Brent and WTI are off around 7% today and at levels last seen late in 2021 and it could get worse if the situation deteriorates further if the situation evolves into a broader banking crisis.
There’s no evidence it will at this point and as such, there’s every chance oil prices bounce back but the break of the range lows may hold unless the situation dramatically improves. The market was previously caught between Chinese growth prospects and global economic risks and events of the last week have seen the latter dominate.
Surging in risk-averse trade
Gold is trading higher on Wednesday amid a flight for safety and as yields tumbled across the board once more. The yellow metal has rallied even against the backdrop of a much stronger dollar which highlights just how much risk aversion we’re seeing, particularly in Europe in response to Credit Suisse.
Unless we see a dramatic improvement in the European banking outlook, gold could eye the February highs around $1,960, with $2,000 then the big test.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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