Gold price bounced back on Wednesday supported by a weaker US dollar and concern regarding growth in emerging markets. The precious metal jumped by 1.5% from its previous two-week low of $1258/ounce, currently trading at the $1277/ounce level. The price-action for Gold has been choppy for the last few weeks, therefore it is considered as a corrective bounce from the selling pressure seen earlier this week. Before the US dollar weakness yesterday, it has placed 6 consecutive hikes in the past week. As the market has priced in the expectations for a slowdown of further Fed rate hikes, there is limited room for the data-dependent Fed to surprise gold to the downside. Meanwhile, the slow down in the emerging economies including China will contribute less to dollar weakness. Given the limited downtrend in dollar, whether gold will be able to persistent in the rally is doubted.
Oil posted significant gains for the second day after a bullish oil inventory data release by US Energy Information Administration (EIA). The report indicated an unexpected drop last week by 3.41 million barrel, which pushed WTI to fresh highs near $46/barrel. Moving along with oil soar, Lonnie fell sharply to a weekly low of $1.2830 and is now trading at $1.2857 as a technical renounce. Despite the positive data, the U.S buildup of crude oil is still staying near the highest level in more than 80 years. In addition, Khalid al-Falih, the new Energy Minister of Saudi Arabia, announced that they will pump more oil into the market to keep the price down in the long term in order to prioritise market share. With expected worsening in the disequilibrium of supply and demand in oil market, we see little chances for oil price to keep up with this upward momentum.
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