Crude Lower, Gold Gets Pummelled
2022.09.15 17:10
got knocked again as demand fears intensified after a wrath of economic data showed the U.S. economy is slowing down. Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and the inflation-fighting Fed seems poised to weaken the U.S. economy.
The U.S. Department of Energy also clarified that the restocking of the Strategic Petroleum Reserve (SPR) won’t happen due to prices falling, and it won’t take action until after fiscal 2023. This clarification from the DOE tentatively removed any support crude had just ahead of the $80-a-barrel level.
Despite all the doom and gloom across the world, the oil market remains tight and prices should outperform all the other commodities.
Gold
Gold got pummelled ruthlessly after another round of economic data supported the Fed’s case to remain very aggressive with fighting inflation. While both Fed regional surveys offered some relief that price increases are slowing, the rest of the data paints a picture of a very strong labor market that is still seeing decent spending and production activity. Until the bond market selloff eases, gold is in trouble.
Once fell below the low of $1,690 from last summer, momentum selling took over. If Treasury yields keep going up, that will keep the selling pressure on bullion. Gold should find support soon as investors will refrain from any overweight positions until they hear directly from the Fed. The last hurdle for gold is in the . Unless markets are surprised with an increase in inflation expectations, gold should stabilize above the $1,650 region.
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