Oil higher as China looks to ease Covid restrictions
Oil prices were higher on Monday, rallying 2% after the G7 imposed a $60 price cap on Russian oil, and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.
From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective.
The decision to leave output unchanged was probably the right one for now, and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.
A significant setback for gold
The jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.
But the yellow metal recovered those jobs report losses and even hit a four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold, and a corrective move of some kind may be on the cards.