Oil on Wild Ride, Gold Powers Higher
2023.03.14 06:02
Wild fluctuations in oil
prices are continuing to whipsaw while remaining within the broad ranges they’ve traded within since early December. Yesterday we saw and WTI testing the lower end of these in response to the turmoil that erupted in the financial system that triggered widespread risk aversion.
Today we’re seeing them trade lower again, albeit still higher than yesterday’s lows. If we see markets settle down, that could prevent a break of the lows but oil traders, like those elsewhere, will remain nervous about the prospect of further turbulence. Suddenly, a break below the lows looks a much greater risk which may keep pressure on in the short term.
A strong rally
An extraordinary rally in over the last couple of sessions has seen it rebound almost 5% and move back above $1,900, which could have been a major barrier of resistance under normal circumstances. But that isn’t what we’re seeing at the moment, and the dramatic decline in yields, combined with a softer dollar and clamor for safe havens, sent the yellow metal soaring.
That may not last if markets correct themselves, assuming the dust settles, which could see interest rate expectations shift higher. Then there’s today’s CPI data which may refocus attention on the Fed’s primary goal of price stability and the success it’s having or not, in driving inflation back to target. It promises to be another interesting day for gold.
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