Oil Tumbles; Gold’s Safe-Haven Status Intact

Published 12/07/2022, 12:06 AM

Oil

Oil prices tumbled as recession worries dominated the headlines and as the oil market lost its tightness. ​It seems to have happened quickly, but the crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies. ​Supplies seem plentiful over the near term, and that has everyone hesitating on what was one of the easiest trades of the year. ​

Energy traders are not confidently buying dips, but they will if the current selloff sends prices close to the levels the Biden administration might refill the SPR, which is in the $70 region. ​

Gold

Gold prices are holding up despite a major risk-off mode on Wall Street. Recession warnings are running wild and are driving a strong move back into safe havens. ​It is not often we see a stronger dollar and significant pressure on stocks as both gold and the dollar rally. ​

Treasury yields are going down as too many investors are now ready to start pricing in a US recession for next year. Gold is still comfortably below the $1800 level and seems likely to consolidate closer to the $1760 region. ​

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