Oil and Gold: Traders' Concerns and Vulnerabilities
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Oil
It’s going to take a lot to change the minds of energy traders. Fears of a weaker global growth outlook are not going away anytime soon. In the US, good news is bad news as that will suggest the Fed might have to do more tightening. Inflation is stubbornly high in Europe that could trigger a lot more rate hikes and a harsher recession.
Even comments from Delta CEO about demand outpacing expectations was unable to provide a boost for oil prices.
Oil is looking very vulnerable here as it is getting close again to the spring lows near the upper mid- $60s. One more plunge and that should make OPEC+ very nervous. A drop below the $67.50 level could trigger momentum selling that won’t stop until the $62.50 region.
Gold
Gold remains under pressure as the US consumer still looks strong. Today’s economic data in the US painted a picture of a resilient economy that could be subject to further Fed tightening. The ECB also signaled there is no end in sight for their rate hiking cycle and that has also helped send Global Bond yields higher. It has been pretty ugly for gold since early May and if expectations grow for further Fed tightening, that could send gold tentatively below the $1900 level.
