Oil rallies during China’s opening, gold’s big month

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are recovering from China’s opening optimism and a new round of US economic data showed the economy is weakening, but still a long way from recession. Energy traders look to next week and see two potential bullish catalysts for oil prices; an OPEC+ decision that could easily justify lower production targets given China’s demand outlook and a Russian crude oil price cap to be introduced; otherwise an import ban from Russia will take effect on December 5e.

US energy security adviser Hochstein reiterated that the US is considering buying more once oil prices are consistently around $70. He stressed that next week will be important for oil prices and that the US will closely monitor the OPEC+ meeting and what happens with the Russian price cap.​

Oil is starting to get back in line and it looks like both supply and demand drivers could turn bullish for crude oil here. If China’s Covid rules are slowly eased and OPEC stays on track, crude oil prices here could rise another 5-10%.

Gold

traders only care about one thing today and that is Fed Chairman Powell’s speech. This is a pivotal time for gold as it is poised to experience its best month since May 2021. If China lifts more lockdowns, a risk rally should help support gold prices, but first we need to see Fed Chairman Powell allow markets to expect a pullback in rate hikes next month and could pause their tightening soon after.​

Gold should find strong resistance at the $1800 level, but if Fed Chairman Powell eases aggressive rhetoric, it could make a run for the $1825 level. If Powell sticks to the script and risk appetite eases, gold could weaken towards the USD 1750 level.

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