Profit-taking over CPI data
Oil prices are slightly lower in the first week. Last week saw them bounce back strongly on optimism around China’s economic recovery, post Covid transition. We are perhaps seeing some profit-taking now ahead of tomorrow’s inflation report which could have a big impact on sentiment one way or another.
Another positive inflation report could help oil reach the December and January highs around $82/WTI and $89/Brent. They haven’t been able to break that barrier yet despite the optimism around China but the prospect of a lower US terminal rate and soft landing could be enough to break through.
Gold fell by more than half a percentage on Monday and hit its lowest level since January. The correction appears to be ongoing with $1,820-$1,830 being the next support test, followed by $1.780-$1,800. This is still more interesting. Ultimately, whether it remains in a corrective phase probably depends on tomorrow’s inflation data and it could take something much lower for it to bounce back, following the January jobs report.
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