Market Outlook: Oil Price Trends and Gold Amid Global Economic Uncertainties - 21.08.2023
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Energy
The oil price rally that has been in place since June has ended. Energy traders will focus on the latest problems from China, the global flash PMIs, the Jackson Hole Symposium, and the BRICS summit. After having an interrupted rally from $68 to $84, WTI crude looks poised to consolidate around the $80 region as traders grapple with a tight market that is facing headwinds from world’s two largest economies. Following the Jackson Hole gathering, it will be clear if the bond market selloff continues or cools down. If the global economic outlook become even more pessimistic, oil might give up a good portion of the recent rally.
Natural gas prices remain fixated over strike action at an LNG facility in Australia. Fresh talks between Woodside Energy and union officials are expected to begin on August 23rd. Natural gas will remain volatile until we have a handle on how gas availability will be for the winter.
Gold
Gold traders will closely watch the annual Jackson Hole Symposium and how aggressive China becomes with providing support to the deepening property crisis. The global bond market selloff has sent gold prices sharply lower over the past month but that could stabilize if we get a dovish Fed Chair Powell and as long as China doesn’t disappoint with the next wave of stimulus.
Spot gold has fallen below the $1900 level, but momentum selling has slowed. Gold traders are also fixating over the $1900 level for gold futures. Currently, gold futures are only $45 away from their March lows, while spot gold is around $80 away. For gold selling pressure to remain, global bond yields might need to surge higher.
