Oil gains ground as risk appetite improves, gold steady

Oil prices have continued to recoup losses in recent days as sentiment has improved, yields have edged higher and global economic prospects have improved. Recent volatility has been a firm reminder of the uncertainty that lies ahead, even as we seemingly near the end of the tightening cycles. While some consequences of much higher interest rates will be obvious, others will be much harder to foresee and that brings downside risks for growth.

But with the recent turmoil abating, the economic outlook is looking slightly better and that has enabled oil prices to recover a little over half of their losses. Further upside could be on the cards but that will depend on multiple factors. Brent and WTI are currently trading around the range lows from early December to early March and it will be interesting to see if they can break back above that psychological barrier.

Gold holding firm

Gold has given back a small portion of its recent gains but it continues to trade not far from the highs of the last couple of weeks. The reason for that is interest rates; expectations have not changed that much since the banking turmoil which suggests investors see scarring in credit markets that will do the Fed's job for it and maybe even tip the economy into recession, requiring multiple rate cuts later in the year.

This is positive for the yellow metal and could ultimately prove to be the catalyst that not only enables it to overcome the $2,000 psychological barrier but also eye up the all-time highs near $2,070.

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