Oil prices are dropping fast as fears of crude demand destruction grow given China’s COVID situation and the de-risking event happening with U.S. stocks. An imminent embargo on Russian energy seems unlikely as the EU continues to work on gaining Hungary’s approval. A firm U.S. dollar has also been dragging down commodities, especially oil prices.
An important story circulating today is bringing much-needed attention to the recent surge in refined oil products. Everything is getting a lot more expensive and that is leading to crude demand destruction fears. Energy stocks are getting hit the hardest today as everyone is now paying attention to refining margins.
Gold
Gold prices are under pressure as investors are dumping stocks and running to the dollar and not bullion. Gold’s worst enemy is the bond market, and right now the outlook for Fed policy suggests surging yields will make this a difficult environment for non-interest-bearing gold.
If the carnage on Wall Street does not improve, eventually gold will start to see some safe-haven flows, but that isn’t happening just yet. Leading up to Wednesday’s inflation report, the move in the dollar should show some signs of exhaustion and that could provide some relief for gold prices.
Gold still looks vulnerable here, and if selling pressure sends prices below the $1,835 level, it could get even uglier. If the dollar hits a short-term top, gold could stabilize here, but should find strong resistance around the $1,920 level.
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