Oil
Oil prices initially rose on hopes that both China’s COVID situation might be improving as protests are pressuring officials to ease some rules. China’s COVID infections declined for the first time in a week, and they are ramping up vaccination efforts for the elderly.
The recent slide in oil prices has complicated where the EU should put the Russian oil price cap. The EU has discussed setting a cap as low as the $62 level, but no consensus agreement seems to be in place.
Energy markets are not properly pricing how resilient the global economy remains and this week we could see an upward revision with the US Q3 GDP reading, while Turkey and Sweden will still show their respective economies grew.
Oil’s rally ran out of steam after reports that OPEC+ might end up keeping their output steady. Expectations were growing for them to seriously consider an output cut as China’s COVID situation steadily worsened.
Gold
Gold prices rallied as the dollar softened over optimism that China’s outlook might be starting to improve. Gold needs a strong China as it drives risk appetite and could bolster demand for jewelry. Gold could extend gains if China’s Health Authority provides some clear signals that they are close to tweaking their Zero-COVID policy.
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