What's Driving Gold, Oil Prices Higher Today?

Gold prices rose on Monday as the dollar declined slightly with investors bracing for the release of the consumer price inflation data on Tuesday that will pave the way for the Federal Reserve's future monetary policy.

What Happened: Spot gold was trading 0.36% higher near the $2,023 per ounce level during Monday morning Asian trading session, while dollar index trended lower by 0.11%, making the yellow metal attractive to offshore buyers.

The SPDR Gold Trust (NYSE:GLD) and the iShares Gold Trust (NYSE:IAU) closed over 1.5% lower on Friday.

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Tim Waterer, chief market analyst at KCM Trade, told Reuters that any signs of inflation being subdued would hinder the dollar due to lower interest rate expectations from the central bank, which could see gold trend higher.

Furthermore, other factors that could impact gold prices are the banking sector health in the U.S. as well as the debt ceiling crisis. Till either of these continue to persist, the safe haven appeal of gold will continue to attract investor interest, pushing prices higher.

Oil: Strong labor data released on Friday calmed recessionary fears to some extent which boosted oil prices. West Texas Intermediate futures expiring in June was trading 0.6% higher at $71.76 per barrel on Monday morning. WTI prices are still below the highs of over $83 per barrel level attained in mid-April this year. The level has witnessed a strong resistance this year.

Inflation data release in the U.S. and China, among other economic indicators, will be keenly watched out by oil traders this week.

Meanwhile, Brent futures expiring in July 2023 were trading 0.53% higher at $75.72 per barrel at the time of writing. The United States Brent Oil Fund (NYSE:BNO) closed 3.99% higher while the Vanguard Energy Index Fund ETF (NYSE:VDE) gained 2.81% on Friday.

Tina Teng, an analyst at CMC Markets said oil’s rebound follows energy stocks’ comeback on Wall Street on Friday after the U.S. reported strong job data that eased concerns about an imminent economic recession. "Crude prices may continue to take the rebounding tailwind," Teng said, according to a Reuters report.

ANZ Research pointed out that the market focus will shift to the tightening oil supply and that OPEC+ output cuts and a rebound in China's demand will likely offset slower demand elsewhere. "We still expect overall demand to grow by 2mb/d, keeping the market under-supplied through this year. Therefore, we expect prices to bottom-out soon," it said.

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