Oil higher on soft US data
Crude prices are rallying as the dollar’s rally came to abrupt halt on growth concerns. A weakening US economy should be bad news for oil, but today’s soft economic readings suggest that OPEC+ will easily be able to justify production cuts soon. The oil market will remain tight whether business activity continues to weaken sharply or if economic growth remains choppy.
Gold got its groove back after the dollar plunged after a round of ugly US economic data suggests Fed Chair Powell won’t be able to stick to the aggressive tightening script for much longer. I don’t think anyone expects Powell to go Volcker on us and that has provided some support here for gold. Powell still needs to justify his hawkish stance at Jackson Hole, but it seems markets may not believe him.
Gold looks like it is poised to stabilize above the $1750 level before we hear from Fed Chair Powell on Friday.