Oil slides again, gold grooves on

Oil

Oil is extending declines on concerns that China’s struggles with COVID are not going away anytime soon and as the global economic worries persist as central banks take rates into very restrictive territory. ​ Crude is not getting extra demand this winter as warm weather spans across the US and Europe. ​ ​

Despite all this oil price weakness, the technicals, specifically driven by the Biden administration’s intention to buy up crude at around the $70 level to refill the strategic petroleum reserve (SPR) should provide some key support. The demand outlook might be near rock bottom, which could suggest a strong reversal for oil could be right around the corner. ​ ​

Gold

Gold is having a great start to the New Year. ​ Wall Street continues to pile into gold as global bond yields continue to slide and recessionary risks remain elevated. Many traders are growing confident that the end of the Fed’s tightening cycle is nearing and that rate cuts could happen at the end of the year. ​

Gold is eyeing the $1900 level, but for that to happen we’ll need to see the bond market rally remain in place a while longer.

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