Gold prices are off the post-mini-crisis peak
|Gold
The gold safe premium has fallen from that peak, but bullion has only dropped to $1955-65 oz levels, some USD 140/oz higher than in early March which reflects the significant shift in Fed pricing with DEC FED FUND INDEX declining from 5.56% to 4.32%.
At the same time, policy debates turned from whether Fed funds of 5.6% will be sufficiently restrictive to now thinking the impact of presumed credit tightening could accomplish much of the Fed's heavy lifting.
But as the mini-crisis abates, traders will likely de-emphasize gold "safe-haven" properties, which likely have run their course on bank runs. It implies short-term downside risk from overbought territory, compounded by the predictive nature of the China gold premium, which has deflated substantially in recent weeks.
But with the H2 recession signal still flashing red, over the near term, it's unlikely that gold will move back below $1925-1900.
Oil
For oil markets, it's out of the frying pan and into the fire; tightening credit conditions are flashing recession signals for H2. Unlike stock investors, oil traders quickly sniff out these signals given that Oil prices better reflect the real economy ( last week was an exception) rather than stocks, which sometimes reflect blue skies regardless of what is happening in the real economy.
And through a "wider" lens view, the lack of speculative money willing to move back into play quickly after a VAR shock amid the drop in liquidity is not helpful for a bullish oil view over the next few months, especially with traders remaining somewhat cautious about the strength of consumption recovery in China during this post-Covid era.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.