Oil Volatility, Gold Recovery – MarketPulseMarketPulse
Initially, crude prices were unable to hold on to initial gains after the EIA’s near-term energy outlook reduced its demand outlook for gasoline and distillates. Previously, Oil was rallying after some bullish calls from Goldman Sachs and Morgan Stanley. Goldman raised its Brent price forecast for the third quarter from 125 USD/bbl to 140 USD/bbl, while Morgan sees Brent reaching 130 USD/bbl, the rise could test 150 USD/bbl.
The oil market is expected to remain tight as supply will continue to tell a story of low inventories. Crude oil stocks will likely see more drawdowns as the driving season and holidays heat up.
The COVID situation in China does not look like it can continue to move in the right direction. With President Xi who may attend Hong Kong July 1st anniversary of the handover, no one expects Hong Kong to enter lockdown.
Oil jumped late after the United States issued a statement to the IAEA board suggesting that a revival of the Iran nuclear deal is still nowhere near happening. The United States said, “What we need is a willing partner in Iran. In particular, Iran should drop demands for the lifting of sanctions that clearly go beyond the JCPOA and now prevent us from reaching a deal.
Gold rebounds as risk appetite declines
Much misfortune and sadness was good news for gold. Target’s second earnings warning in 20 days and the pessimistic outlook from the World Bank were just what gold needed to start a rally. Treasury yields are also down sharply after yesterday’s spike, which is good news for bullion holders.
Gold is likely to consolidate around the USD 1840-1870 level ahead of Friday’s inflation report.
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