Gold was up in Asia after hitting a five-month high the previous session. Even as the dollar strengthened, persistent inflationary concerns boosted the yellow metal.
Gold futures rose 0.16 percent to $1,869.55, as concerns about broader inflation boosted the metal’s safe-haven appeal. The dollar rose slightly on Tuesday and remained close to a 16-month high.
Investors are now waiting for U.S. retail sales data. They need to see what the Fed will do next in terms of interest rate hikes. Richmond Federal Reserve President Thomas Barkin said that the United States Federal Reserve would raise interest rates if high inflation persists. The Fed should wait to see if inflation and labor shortages continue.
Andrew Bailey, Governor of the Bank of England, said he was “very uneasy” about high inflation. Hence, he voted to keep interest rates unchanged when the central bank announced its policy decision earlier in November.
On Monday, Christine Lagarde, President of the European Central Bank, said that tightening monetary policy now to tame inflation risks suffocating the eurozone’s recovery, casting doubt on the need for tighter policy.
Oil prices recovered from a low start on Tuesday, thanks to concerns about tight inventories. Brent futures rose 96 cents, or 1.2 percent, to $83.01 a barrel. Meanwhile, WTI crude in the United States rose 80 cents, or 1%, to $81.68 a barrel.
At these oil prices, supply will increase, but it may take six months because inventories are so low. According to Trafigura’s Chief Executive Officer Jeremy Weir, global oil markets remain highly tight and heavily backward as demand returns to pre-pandemic levels.
Concerns about demand destruction caused by the COVID-19 pandemic remained. Europe has once again become the epicenter of the COVID-19 pandemic. It has prompted some governments to consider reinstating lockdowns while China is battling the spread of its largest outbreak caused by the Delta variant.
The Organization of Petroleum Exporting Countries (OPEC) cut its fourth-quarter global oil demand forecast by 330,000 barrels per day from last month’s forecast. It cited high energy prices as a barrier to economic recovery.
For the third week in a row, U.S. energy companies added oil and natural gas rigs. It received a boost from a 65 percent increase in U.S. crude prices this year.
The Commodity Futures Trading Commission (CFTC) of the United States reported that money managers increased their net long positions in U.S. crude futures and options in the week ending March 31.
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