Oil tumbles as IEA revises down demand growth
Oil prices are continuing to trend lower as we move towards the end of the week, with recession fears once again the driving force. The IEA alluded to economic risks in its monthly oil report, in which it downgraded demand growth this year and next by 100,000 barrels per day.
The downward revision would have been larger but for the stronger rebound in developing and emerging economies led by China. I expect those forecasts will be downgraded further as the economic reality begins to bite.
Gold slides again on stronger dollar
Gold is off more than 1% as the dollar continues to drive higher. The yellow metal is feeling the heat from the inflation data and aggressive tightening in response. We could see its popularity improve once we see the peak in the inflation data, which we may now have in the US, but its tendency for upside surprises will leave investors cautious.
Once the peak is in place and we see signs of inflation pressures retreating, we could see gold back in favour as the economy drifts into recession. For now, a break of USD 1,700 is looking very possible, with USD 1,680 then key. There may well be more pain to come for gold.