Wed, Jun 23, 2021 @ 12:58 GMT
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Oil Rally Continues, Gold Dips On Yellen

Oil surges as easing lockdowns boost demand

Oil is on fire. After gains of more than 2% in the previous week, the black stuff has already risen over 4% so far this week. A record fall in US crude inventories and growing optimism that the economic reopening in the US and Europe will drive fuel demand is lifting oil prices higher.

The American Petroleum Institute data showed a draw of 7.688 million barrels in the week ending 30 April. This was a significantly bigger draw than the 2.19 million draw forecast and down considerably from the 4.31 million build recorded in the previous week.

The data underpins expectations that fuel demand is rising as the US and UK as their economies reopen. An accelerating vaccine programme and news that the EC will ease curbs for the summer holiday season point to demand picking up further.

The oil market appears to have turned a critical corner towards demand normalisation. Rising Covid cases in India and an extended lockdown in Japan will remain on the oil market’s radar but show no signs of holding the bulls back for now.

Gold pressurised by Yellen

A stronger US dollar and the prospect of higher interest rates is not a good combination for gold. The precious metal tumbled more than 0.7% in the previous session on the back of Janet Yellen’s rate hike comments and is extending those losses today.

The prospect of tighter monetary policy and higher interest rates has been a central focus for the markets over recent months. While Fed Chair Powell’s constant reiteration of his dovish stance had started to seep in, Yellen’s comments will have undone some of that hard work, regardless of her backtracking.

Attention will now shift to Friday’s non-farm payroll numbers for further clues over the health of the US economy and the recovery in the labour market.

MarketPulse is a forex, commodities, and global indices research, analysis, and news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

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