Oil Drops As Ukraine Crisis Eases
Crude prices declined over expectations that Russia may soon pull some troops and on optimism that an Iran nuclear deal is within reach. Profit-taking with oil was inevitable after Russia’s Defense Ministry stated that some troops are starting to return to their regular bases after completing drills. Talks between German Chancellor Scholz and President Putin supported market expectations that an imminent Russian invasion seems less likely. The Ukraine situation still remains tense and oil prices could swing $10 in either direction. The oil market remains very tight and regardless of the Ukraine situation, crude prices are still on course for a move towards $100 a barrel.
President Biden is expected to deliver some executive orders to help ease the pain Americans are seeing at the gas pump. Biden’s options are limited but do include tapping of the strategic petroleum reserves again or suspending gasoline taxes.
Gold
Gold prices tumbled over a de-escalation in geopolitical tensions and after a hot PPI report supported the argument for the Fed to take bolder action with that first rate hike. Optimism that Russia could pull back some troops was the primary domino that sent gold lower. Gold was ripe for some profit-taking but a sustained move lower might not happen as Wall Street remains mostly confident that the Fed won’t overtighten policy this year.
Gold prices should see strong support from the $1830 to $1840 zone as the easing of geopolitical tensions.