Oil prices are slightly lower, entirely giving up earlier gains that amounted to more than 5% at one point. Brent peaked just shy of USD 120 which is a level that’s been talked about a lot in recent weeks but perhaps many won’t have expected to see so fast. The sanctions against Russia have been severe and the consequences are evident already, even if they were meant to shield exports of oil and other key commodities.
What we’re probably seeing here is some profit-taking because the price has risen so far so fast. I would be surprised if upward pressure on oil prices doesn’t resume unless something fundamentally improves. That could temporarily come from a nuclear deal with Iran. But even this would not be enough to offset a disruption to Russian exports.
Gold flat but could have further to rise
Gold is flat on the day after giving up earlier gains. It peaked at around USD 1,950 earlier in the week and we seem to have seen some profit-taking since. The sanctions sent shockwaves throughout the markets and gold benefited from the impact on commodity prices as well as the safe haven surge.
I expect it will still see plenty of support over the coming weeks unless something significantly improves in Ukraine which, sadly, isn’t looking likely. We’ve seen what impact supply disruptions have had on inflation globally over the last year and the sanctions on Russia could significantly impact many commodities whether they’re designed to or not which should continue to support gold for now.