Broken Supply Chain Part 3 & Clashing Narratives
In oil, news of further obstacles to an Iran nuclear deal has revivded US Crude oil off its $101 support. Each passing day shows Putin digging deeper into the Ukraine with chances of compromise increasingly thin.
There are 2 ways to break oil: 1) demand destruction due to recession; or 2) sudden explosion of production. The 1st option is a far likelier possibility than the 2nd option, albeit not in the near-term.
As for gold, it needs some sort of a break. Whether such pause extends ahead of next week's FOMC decision or after, we're not sure. One factor remaining favourable for gold is that breakeven inflation levels is surging for both 5 and 10 year terms (see chart above), a positive for precious metals, especially as the Fed is "forced" to remain behind the curve.
3 weeks ago I laid out the case for $2200 gold to our WhatsApp Broadcast Group, describing it as "medium term target". It seems that Q2 is a more probable timing for now, before I update the next target depending on momentum/price metrics on the day.Latest IMTs
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