Oil prices are a little lower again on Wednesday after falling around 3% a day earlier. This came following a strong move in recent weeks in which crude prices rallied around 20% on the back of the OPEC+ output cut and the prospect of less restrictive Covid measures in China, which have not been confirmed.
The API inventory data came late in the day on Tuesday after the bulk of the losses had already occurred. If the large inventory build is confirmed by EIA today, it will be interesting to see if it generates a bigger reaction in the markets, with Brent now trading back in the middle of the $90-100 range.
Gold surges ahead of CPI
A surge in gold on Tuesday saw the yellow metal smash through $1,680 and then $1,700 resistance and settle above here, as risk appetite improved and the dollar retreated. While it’s hard to attribute the rally to any particular event, the technical loss of both of those resistance levels won’t have done it any harm.
The question now is whether it can hold onto those gains once the latest inflation report drops. It may well be that gold’s revival, and the dollar’s retreat, are driven by an expectation that the CPI data will be favourable but we’ve seen what the dangers of that are before. Especially when it comes to inflation data. The next test to the upside for gold falls around $1,730, while prior resistance of $1,700 and $1,680 could now become support.