CRUDE OIL & GOLD TALKING POINTS:
- Crude oil price bounce fizzles amid emerging market turmoil
- Gold prices[1] torn as yields decline, US Dollar[2] finds haven bid
- US, Japan trade talks may trump IEA report and US CPI data
Crude oil prices attempted a tepid recovery yesterday following the prior session’s brutal selloff[3]. The move higher was swiftly aborted however as worrying geopolitical news flow – notably from Russia and Turkey[4] – triggered a selloff in emerging market assets and broadly soured investors’ mood. The sentiment-sensitive WTI benchmark retreated from intraday highs to close with a narrow loss.
Gold price action was likewise muddled by the bloodletting in the EM space. Haven-seeking flows buoyed the US Dollar alongside Treasury bonds, depressing yields. That put the yellow metal’s role as baseline anti-fiat alternative at odds with its character as non-interest-bearing alternative. Not surprisingly, that translated into inconclusive performance (although sellers narrowly prevailed by the daily close).
US, JAPAN TRADE TALKS MAY TRUMP IEA REPORT AND CPI DATA
Looking ahead, the monthly IEA Oil Market Report may help shape physical flow expectations. Crude prices may edge up if it echoes an EIA prognosis published earlier in the week that envisioned a downshift in US output growth coupled with a pickup in demand. Meanwhile, gold is eyeing US CPI data. Anything short of a wild deviation from forecasts seems unlikely to command attention[5] however.
On balance, that probably puts sentiment trends back into focus. Continued emerging market turmoil is likely to continue to cloud the landscape but news of a breakthrough in trade talks between
