Oil
Crude prices are rallying as China’s robust demand will likely lead to rising inventories and increased activity for refiners. The short-term crude demand outlook is looking strong as the US labor market remains strong and on China’s reopening momentum. US recession fears are still here and they won’t be going away anytime soon, so WTI crude might hover around the $80 to $85 region.
Oil pared some of its gains after the EIA crude oil report showed demand bounced, shrugging off the expected rise in inventories. A stockpile build of 8.4 million barrels, was more than the early forecast of a draw of 1.8 million, but slightly higher than yesterday’s API’s build of 7.6 million barrels.
Gold
Gold prices are rallying as investors seek safety as recession and default risks won’t be going away anytime soon. Mixed US data continues to support the idea that the Fed might need to do more tightening given how strong the labor market remains, but the rest of the economy is weakening. Gold will look even more attractive if the US is viewed as likely having a recession in the second half of the year, which could mean earnings will contract far worse than markets are pricing.
If gold doesn’t make a quick run towards the $1935 level, it could consolidate around the $1900 region.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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- Source: https://www.marketpulse.com/20230119/oil-higher-gold-shines/