Oil remains volatile, gold claws back

Oil rebounds after CPI report

Crude prices are rebounding after yesterday’s collapse as energy traders digest a hot inflation report that raises the risk that the Fed could send this economy into a recession by the end of the year. ​ A couple of key points for energy traders are that they are still looking at a tight oil market that probably won’t see a severe drop in crude demand just yet and the likelihood this will be a severe recession are low.

A wrath of economic data, monthly oil reports, and President Biden’s trip to the Mideast will weigh on oil prices, but none of this will change how tight the oil market remains right now. WTI crude might stay in the mid-USD 90s for a while before it makes a return to the USD 100 level. ​

Gold

Gold prices are clawing back as a deepening Treasury curve inversion suggests the peak is in place for yields. ​ Non-interest-bearing gold might start to see some safe-haven flows as global recession risks will cap how high rates can go by the end of the year. ​ ​

A very hot inflation report initially sent gold prices lower as the risk of much more aggressive Fed tightening grew, but gold turned positive as recession risk for the US is possibly creeping to the end of the year.

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