Crude Oil Price Gains May Stall as Gold Drops on Fed Rate Hike Bets

CRUDE OIL GOLD TALKING POINTS:

  • Crude oil prices surge on supply squeeze fears before Iran sanctions
  • Gold prices fall as swelling Fed rate hike bets boost yields, US Dollar
  • Risk aversion may see oil rally stall as gold prices continue to decline

Crude oil prices returned to the offensive after a brief pause in a move that the newswires attributed to fears of a global supply squeeze as sanctions are re-imposed on exports from Iran. The move was capped after EIA inventory data showed a dramatically larger-than-expected build of 7.98 million barrels. That marked the largest one-week stockpile increase since early March 2017.

Gold prices fell as traders saw cooling Italian budget woes as giving the Fed a freer hand to press on with interest rate hikes, as expected. The metal fell alongside the spread between Italian and German 10-year bond yields – a measure of the added risk in lending to Rome versus Berlin – while a steepening of the 2019 tightening path implied in Fed Funds futures drove the US Dollar and Treasury bond yields up

Article source: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2018/10/04/Crude-Oil-Price-Gains-May-Stall-as-Gold-Drops-on-Fed-Rate-Hike-Bets.html