Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Oil Takes a Tumble, Gold Eyes Fed

Published 05/03/2023, 08:10 AM
XAU/USD
-
GC
-
CL
-

Bank woes send oil prices tumbling once more

Oil prices have been crushed again over the last 24 hours as US regional bank shares sold off heavily and fuelled fears of a more significant economic downturn this year. The warning signs are there that investors are extremely anxious about the global economic prospects, particularly the US, and the data is slowly catching up which should deter the Fed from hiking today but it in all likelihood won’t.

The US may be heading for recession and they may not be alone which doesn’t bode well for crude demand. Oil prices are heading back to the March lows which will no doubt frustrate OPEC+ so soon after cutting output. Will the group be tempted to hold an emergency meeting or wait to see how the situation develops? They’ve denied being price driven in the past but it’s clear that’s not entirely true. Another surprise intervention could act as a further deterrent to sell-offs in the future on the belief the cartel will simply jump in again.

New record highs incoming for gold?

Gold jumped back above $2,000 on Tuesday as investors fretted about the prospect of further disruption in US regional banks, pushing US yields lower and weighing on the dollar. In other words, investors are expecting a swift U-turn from the central bank in light of what we’ve seen in the US banking sector in recent months and yesterday’s moves have further solidified that view.

A dovish Fed today, either in the form of a surprise pause or a hint at rate cuts this year, maybe even a neutral shift, could further support gold and maybe even trigger a run at record highs which are now not that far away. The interesting thing will be how markets would respond if the Fed sticks to its hiking script of recent months because aside from exacerbating the pain on the economy, it would also surely necessitate an even more aggressive shift a little later on.

Original Post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.