Oil falls Due to USD and China Lockdowns; Gold Nears $1700

As China continues to struggle in its battle against the COVID pandemic and concerns of a worldwide recession mount as rates rise, crude oil prices are plummeting. OPEC+ is expected to discuss output reductions at their meeting on September 5; however, despite Friday’s increase in oil prices, the benchmarks were still on pace to post their worst weekly loss in four due to concerns that demand will be negatively impacted by Covid-19 curbs in China and weak global growth.

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China is the primary area of uncertainty for the forecast on crude consumption, and it appears that rebuilding the impetus will be difficult to achieve. Another major shock will be brought on by the shutdown of Chengdu, a crucial transport hub for the Chinese economy.

Wall Street is currently in a risk-off mode, pushing the greenback to new records and exerting extra pressure on all goods. As the likelihood of additional Chinese lockdowns increases and the king dollar appears poised for another significant surge, oil is now looking highly susceptible.

WTI crude might drop towards the $80 area if September turns into a carnage on Wall Street; however, the supply forecast should keep the selloff from going much farther. Given the ongoing concerns about the state of the global economy and markets, OPEC+ will have little trouble defending a minor output decrease.

Following another good set of economic statistics that raises the possibility of additional Fed rate hikes, gold prices are in freefall and have tested the $1700 mark. As rising Treasury yields have revived the king dollar trade, gold is turning into a punchbag. There has only been negative news worldwide, and no relief for gold is in view until the rise in global bond yields ends. ​If the nonfarm payroll report is impressive, momentum selling of gold may hit the $1,650 area.

OPEC+, often known as the Organization of the Petroleum Exporting Countries and Allies, is scheduled to meet on September 5 amid a backdrop of dropping demands and price deflation, even if leading producer Saudi Arabia asserts that supply is still tight. Investors are worried about the immediate effects of China’s growing Covid-19 limits; Chengdu was the latest city to demand a shutdown on Thursday, which would affect companies like Volvo.


On the same day, data revealed that due to weaker demand, power constraints, and Covid-19 outbreaks, factory activity in China shrank in August for the first time in three months.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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