Oil prices recovering, gold falls below $1900 on strong US data

Oil continues to consolidate amid an uncertain economic outlook

Oil prices are continuing to recover on Thursday after falling back toward their range lows on Wednesday. The gradual consolidation that we’re seeing in crude doesn’t appear to be nearing an end, with the price simply fluctuating between the range highs and lows over the last couple of months.

The uncertainty around inflation, interest rates, and therefore the economy may well be behind that as investors have frequently been caught out by just how stubborn price pressures have been and how much central banks will need to do in order to contain them. Until we get more clarity on that, this range trading may continue.

Gold under increasing pressure amid more economic resilience

Gold broke below $1,900 for the first time in more than three months earlier today on the back of stronger US data which in turn boosted US yields and the dollar. The economy remains incredibly resilient which will only make the Federal Reserve more nervous and convince policymakers that more tightening will be needed to get inflation under control.

A rate hike in July now looks highly likely and you can see that reflected in the markets, with it now more than 80% priced in. And that’s got investors wondering whether the Fed’s insistence that at least two more will be needed is as over the top as they first appeared to think. Recently, traders have found themselves chasing Fed expectations rather than the other way around.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/