Oil pares gains, gold softens

Oil

Crude prices are higher on optimism the global economic outlook won’t get crushed from over-tightening by central banks. ​ The oil market will likely remain balanced over the short-term, but the risks are clearly to the upside. ​

Oil didn’t get any favors from the EIA crude oil inventory report that showed a modest build and as production rose to the highest levels since April 2020. ​ The oil demand situation appears to be improving, however, so oil shouldn’t selloff at all. ​ ​

Gold

Gold prices edged lower after the post-Powell Fed speak turned out to be very hawkish. ​ Fed’s Williams and Cook are supporting the argument that the Fed has two more rate hikes in them and that rates may have to stay higher for some time. ​ Some traders are betting that rates could climb much higher than 50 bp in combined hikes. ​ Gold looks like it will consolidate here until we get beyond the Valentine’s day inflation report.

Gold may seem some flows as earnings weigh on risk appetite and drag stocks down. Gold’s primary driver remains the next big move in yields, but it should start to become a safe-haven again if the strong stock market start to the year ends up being a bear market rally. ​

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