Oil
It was a busy day covering oil markets. The anticipated SPR release day has come, and it certainly did not disappoint. The coordinated SPR release was smaller than expected and undoubtedly will be met by less production from OPEC+. The pullback with oil prices is officially over as this oil market deficit will not go away anytime soon. The US may need to consider another SPR release, but even if they talk about it, energy traders know that OPEC+ controls this market.
The focus was now solely back on OPEC+ and no one would be surprised if they scaled down their production plans given the short-term uncertainties to the crude demand outlook and some vengeance for the coordinated tapping of oil reserves.
Gold breaks below 1800
Gold remained in the danger zone after breaking below the USD 1800 level. To make matters worse, gold was struggling as margin pressures grow and some investors were preferring Bitcoin as their inflation hedge.
The primary bearish catalyst for gold was the strong move higher with real yields. Fed rate hike expectations were between two and three rate hikes in 2022, but that should be the extent of that steepening positioning.
If gold falls below USD 1758, which would be a lower low, bearish momentum could target the USD 1725 region. Inflation fundamentals still support flows for bullion, but if Wall Street grows more confident that dollar dominance was far from over, gold bears could remain in control a while longer.