Oil remains volatile but range-bound amid an uncertain outlook
Oil is trading a little higher on Tuesday after rebounding off the lows in very choppy conditions in recent days. While there will of course be various contributing factors behind these moves, the fact remains that oil is trading within the same range it has for almost two months and what we’re continuing to see is it fluctuate roughly between the upper and lower boundaries.
Brent has fallen just short of the previous lows now on four occasions in the last couple of months which may suggest we’re seeing some consolidation but if we are, it’s extremely gradual and could last many more months yet. I would say recent trading is merely a reflection of the immensely uncertain environment caused by extremely stubborn inflation pressures and the ever-changing expectations for interest rates.
Gold weighed down by stubborn inflation and higher rate expectations
Stubborn inflation is proving to be challenging for gold which has continued to pare its 2023 gains over the last couple of weeks. There has clearly been a view until recently that inflation will start to fall considerably which will enable central banks to stop hiking, maybe even consider easing, boosting gold’s prospects. But as yet, we’re seeing quite the opposite.
Traders still appear somewhat reluctant to accept that it won’t happen, which has helped bring some resilience to the yellow metal during declines. That belief hasn’t yet been rewarded, with gold now more than 7% off its highs and the recent break below $1,940 could be another sign of vulnerability.