Oil prices are easing a little on Tuesday, a day after Brent crude came within a whisker of $100 again. It’s traded below this major psychological level since July, but recent developments have propelled the price higher again, up more than 20% from the September lows.
OPEC+ had a big hand to play in that, but speculation around China’s zero-COVID commitment may also be a factor in recent gains. That said, those rumours still haven’t been confirmed. In fact, outbreaks in Guangzhou and other major cities have led to increased restrictions. It may be a little early to get carried away with speculation, especially when any significant change in policy would represent an enormous shift from the status quo. Still, the performance of Chinese stocks suggests there’s a belief that there’s no smoke without fire, which may also be enabling the continued rise in crude.
Gold Edges Lower Amid Stronger U.S. Dollar
The U.S. dollar is staging a small recovery around its recent lows, which is weighing a little on gold this week. The yellow metal surged late last week following the jobs report before stumbling around $1,680, which has previously been a notable level of resistance. Still, it’s holding onto the bulk of those gains quite well, suggesting traders are anticipating some good news from the inflation data on Thursday, at least good enough to convince the Fed of the need to slow the pace of tightening next month.
Anything that suggests they won’t need to rise as high as the Fed indicated could give gold another boost. Although given what the central bank said last week, you have to wonder if they are in fact anticipating another stubborn reading.
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