Scenarios for Gold; Can Oil Sustain 2021 Rally?

CME Group
Economic Research

Gold’s Path Forward; Oil’s Challenges and Bright Spot

By Blu Putnam, Chief Economist
Erik Norland, Senior Economist
CME Group

Gold’s Path Runs Through Inflation, Fed Response
  • Gold has been trading in a wide range from $1,700 to $1,950 the past year.
  • Fed’s current view is that high inflation of the past few months will be transitory.
  • If Fed’s consensus changes, it might raise rates faster than fed funds suggest.
  • A less accommodative Fed could adversely affect gold like in 1980.
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Can Low Inventories Help Oil Sustain Rally?
  • Recovery in U.S. air travel has slowed over the past two months.
  • U.S. oil output could increase, along with top producers like Saudi Arabia.
  • Oil market faces seasonally weak demand period as fall arrives.
  • U.S. oil inventories are lower than levels from a year ago.
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