USD 100 oil is back and it is probably going to stay. The crude correction ended now that the market has mostly priced in the strategic petroleum release plan, China is beginning to lift some of their lockdowns and as negotiations between Russia and Ukraine appear to have hit a dead-end. The energy market expects to remain very tight from the summer and if geopolitical risks remain elevated, USD 100 oil should easily hold.
The latest inflation report gave a boost to risky assets as Wall Street became optimistic that surging prices may have peaked. A potentially less aggressive Fed later this year is good news for commodities and that helped crude prices extend gains.
Gold rallies after inflation report
Gold prices rallied as Treasury yields declined following a cooler-than-expected inflation report that could signal the peak is in place. Inflation rose at the fastest pace since 1981 and Wall Street is breathing a sigh of relief that inflation was not scorching hot today. Core price increases are slowing and investors are hoping that could mean the Fed may not need to maintain an aggressive monetary stance beyond the summer.
For gold to rally above the USD 2,000 level, US Treasuries need to extend their retreat, with the 10-year yield making a run below the 2.55% level. The Fed has a good chance to contain inflation and that should help bond yields stabilize, which is good news for gold bulls.
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