4/24/2024

Oil and gold in a moment of simultaneous growth

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Key points:

  • Brent and WTI oil prices rose amid a decline in US crude oil inventories.
  • Gold has recovered some of its losses from last week’s decline but remains in a tight range.
  • According to US macroeconomic data, strong GDP growth and a moderate increase in PCE are expected.

Oil prices continued their upward movement on Wednesday. This was boosted by industry data showing an unexpected decline in US crude oil inventories last week. However, the markets remain wary due to the development of the situation in the Middle East.

Gold prices also showed growth, but were in a narrow range. Investors are awaiting the publication of macroeconomic indicators in the United States, which may shed light on the Federal Reserve’s future plans for changing interest rates.

Oil rises on declining US crude inventories

Futures for Brent and WTI oil rose in price at auction on April 24. Brent rose 0.29% to $88.68 a barrel, while WTI rose 0.31% to $83.62 a barrel. U.S. crude oil inventories unexpectedly fell by 3.237 million barrels in the week ending April 19, according to American Petroleum Institute data released April 24. Analysts, on the contrary, predicted an increase of 800,000 barrels.

The market is also influenced by expectations of a possible reduction in interest rates in the US. Their reduction could lead to stimulation of economic growth, which, in turn, could spur demand for oil from the world’s largest consumer of fuel.

Analysts continue to believe that geopolitical unrest in the Middle East will support the oil market, although the impact on supplies is still limited. Industry insiders believe that the Brent price will consolidate at $90 per barrel by the end of 2024.

Gold recovered losses from decline during the week

Spot gold recovered some of Tuesday’s losses, rising 0.2% to $2,325.23 an ounce. The day before, the price of gold dropped to its lowest level since April 5. Futures for American gold fell by 0.2%, reaching $2,338.00.

Analysts believe Tuesday’s false breakout of $2,300 could indicate gold prices will remain range-bound until US inflation data is released and the Bank of Japan meets.

On April 12, gold prices hit an all-time high of $2,431.29, up nearly $400 since early March. However, growth then stalled amid easing concerns about the escalation of regional conflict in the Middle East. As a result, gold fell in price by more than 2% over the past week.

Focus on recent US macroeconomic data

This week, investors will closely monitor the release of important US macroeconomic indicators. The country’s gross domestic product (GDP) data will be released on Thursday, followed by the Personal Consumption Expenditures (PCE) report on Friday. Analysts predict that US GDP data will show steady growth, and the PCE report will show a moderate increase.

Strong economic indicators are expected to support the US dollar. This may lead to an increase in its exchange rate against other currencies. A stronger dollar and rising bond yields could weigh on the price of gold by making it less attractive to investors holding other currencies.

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