Oil Stabilizes, Gold Under Pressure
2022.10.19 10:14
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Oil prices are trading higher on Wednesday after falling once more a day earlier. Brent was down around 10% from just over a week ago at one stage on Tuesday, a sign of how concerned traders are about the economic outlook and how serious the Biden administration is about using the SPR to drive prices lower ahead of the midterms.
It’s such a huge political issue in the US and could swing the midterms one way or another with the margins in the House and the Senate so fine. Which explains why the White House has responded so furiously to the OPEC+ output cut. Biden is expected to confirm that the final 15 million barrels, of the 180 million committed to earlier this year, will be sold by the end of the year while leaving the door open to further sales.
With stabilizing around $90 and between $80 and $85, you have to wonder how OPEC+ countries will feel about how the markets are positioned and whether further cuts could be considered.
The Bullish Case For Gold
While part of me is questioning just how far gold can realistically fall after a terrible decline from its peak seven months ago, I continue to struggle to come up with a convincing bullish case in the short term. At some point, peak inflation and rate pricing is going to be in sight, at which point the case for the yellow metal could arguably improve.
But is anyone confident that we’re there yet? We may not be far away but as you can see with , there isn’t much bullish appetite which perhaps suggests traders are still viewing peak rates and inflation with caution. While that remains the case, the yellow metal may come under further pressure with the next test of support – $1,640 has crumbled this morning – coming around $1,620 with $1,600 below that interesting.
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