Oil claws higher, gold eyes Fed

Oil steady after strong fight back

Oil prices are a little flat, in line with the broader markets, after enjoying a bumper recovery last week. After falling heavily a week ago, WTI made strong gains over the following days to move back above USD 70 and close out the week higher than it opened. Despite a little softness earlier in the session, we’re now back around those levels once again.

Risk appetite has clearly massively improved over the last week and just like other risk assets, oil is taking a breather ahead of an intense few days. The second-quarter recovery has got pulses racing at the prospect of what’s to come. The next wave of Covid is a downside risk to that but not to the extent that the previous surges have. Optimism is still strong and for good reason.

Gold consolidates ahead of Fed

Gold remains very much in consolidation mode as it continues to hover around USD 1,800. The yellow metal was one of last week’s losers but it didn’t suffer too much considering the dramatic improvement in risk appetite. Yields have risen but from very low levels and while optimism is growing around the economy as we exit the pandemic in the coming quarters, inflation is still widely being viewed as transitory meaning central banks are in no rush to remove the stabilizers. I guess we’ll know a lot more about this from the Fed’s perspective in a couple of days.

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