“It looks like China is the elephant in the room,” said Jeffrey Halley, an analyst at OANDA. “The tightening of restrictions to achieve ‘COVID zero’ in Shanghai and fears that omicron has spread in Beijing torpedo sentiment today.”
Brent crude was down $5.26, or 4.93%, at $101.22 a barrel, hovering around its lowest since April 12. West Texas Intermediate in the United States (WTI) fell $5.19, or 5.04%, to $96.94.
“Shanghai shows no signs of abandoning its strict ‘COVID zero’ policy, instead promising to tighten enforcement of restrictions, which could further hurt oil demand,” City Index’s Fiona Cincotta said.
Crude oil also weakened on the prospect of higher interest rates in the United States, which is boosting the dollar. A strong US currency makes greenback-priced commodities more expensive for holders of other currencies and tends to reflect greater risk aversion among investors.
Both oil benchmarks lost almost 5% last week on demand concerns and Brent has fallen sharply after hitting $139 last month, the highest since 2008.
The Gold prices fell more than 1% on Monday to their lowest level in four weeks, as prospects for an aggressive tightening of monetary policy by the US Federal Reserve and a strengthening dollar eroded the appeal of gold. of the gold metal.
Spot gold fell 1% to $1,909.61 per ounce, having hit a low not seen since March 29 at $1,904.40. US gold futures were down 1.3% at $1,908.90.
“It looks like rate hike fears have taken over lately,” Julius Baer analyst Carsten Menke said.
With expectations of a half percentage point hike in interest rates at the Federal Reserve’s May meeting, traders bet on Friday that the US central bank will raise rates further in coming months to curb the rising inflation.
Gold is highly sensitive to rising US interest rates and rising Treasury yields, which raise the opportunity cost of holding bullion while boosting the dollar, the currency in which quote. However, it is considered a safe store of value during economic and political crises.
“We have a three-month target of $1,850,” Menke said, adding that “we have been of the view that gold is quite expensive as a safe-haven asset… We would think that inflation pressures are about to recede and That should take away some of the safe haven demand we’ve seen for gold.”
The dollar rose to a level last seen in March 2020, making gold more expensive for holders of other currencies.
Among other precious metals, palladium fell 3.4% to $2,293.33 an ounce, while platinum fell 2% to $911.69, after hitting its lowest level since December 2021. Silver was down one 2.2% to $23.60 an ounce, after hitting a low of more than two months.
Source: Ambito
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