Oil
Crude prices are declining as Beijing tightens up their Covid controls and as tanker-tracker data showed Russian crude flows increased. ​ Energy traders are not convinced that the EU will be able to move forward with an embargo on Russian oil. ​
Oil seems to have major support around the USD 100 level as OPEC+ seems poised to rubber-stamp next month’s output increase target that they probably won’t hit. ​ Still weighing on oil is the uncertainty with China’s Covid situation. ​ Energy traders are also keeping a close eye on the Fed policy meeting which could contain a hawkish surprise that sends the dollar higher, which will drag down commodity prices.
Gold
Gold’s two weeks of pain appears to be over as Wall Street has priced in the majority of global central bank tightening. ​ After a major run higher for US and European bond yields, non-interest bearing gold is mustering up a rally as fixed income traders appear to be getting closer to pricing in peak hawkishness.
Gold has been battered as investors brace for the most hawkish Fed policy decision since the start of the millennium. ​ The dollar rally could be getting closer to nearing its end and that should be good news for bullion. ​ Gold’s fate could very well be determined on how aggressive the Fed will be with balance sheet normalization.
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