Gold/Forex
Gold was rallying earlier this week as investors ran to safety over fears the Fed will aggressively tighten policy and as the list of geopolitical risks continued to grow: The Russian-Ukraine standoff will remain a tense situation for the foreseeable future, North Korea may resume nuclear tests, and Iran nuclear talks were approaching a decisive moment.
The dollar edged higher as the Treasury steadied into the start of the two-day FOMC policy meeting on Tuesday.
Oil Rises Over Russia/Ukraine Jitters
Geopolitical risks sent crude prices higher as a tight oil market that was already battling low inventories seemed vulnerable to shortages in the coming months. Energy traders don’t know how the situation over the Ukraine-Russia border will unfold or if Iran will be able to reach a nuclear deal, but the odds were something won’t go right and that will likely lead to some supply shortages for the oil market.
WTI crude may struggle to rise above last week’s high until markets get past the FOMC policy decision on Wednesday, as it could trigger a major de-risking market-moving event that even oil prices would not be able to avoid. The oil market was poised to see higher prices, but volatility in both directions should increase given some of the rising risks to growth outlook.