Oil is still in range
She bounced back today, continuing her best performance that she started this week with. The clear success of China’s transition from zero Covid to coexistence with the virus is the biggest credit for the recovery we are witnessing. Naturally, a strong recovery will lead to higher demand and increased competition.
However, the markets have been essentially range bound since early December – albeit a wide range – and the recovery simply brought the price back to the middle of that range. The temporary suspension of work at the Ceyhan station in the wake of the earthquake in the region may push prices up slightly on Monday, which could lead to continued price hikes. However, this is likely to wear off soon after no damage is found and is therefore unlikely to be a significant factor in price movements.
Correct
Gold selling seems to have stalled around the $1,860 level, after seeing some support over the past two sessions. This level was notable on the way up as well last month, but I suspect it may not mark the end of the correction, given that the rally lasted from the beginning of November until last week.
We could see gold recover some of its losses, and at this point it would be obvious that the 1,900 level will be interesting, as it has been a massive support area in recent weeks. A move lower could shift interest to the $1,820-1,830 range, which stands out as a big initial test.
