The commodities sector is rallying Tuesday, with significant gains across the board. Gold prices (GC=F) have hit a record high, while WTI Crude Oil futures (CL=F) are trading around $86 per barrel. Yahoo Finance’s Ines Ferré breaks down the details, providing insights into how surging energy commodity prices may show up in upcoming inflation prints.
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Editor’s note: This article was written by Angel Smith
Video Transcript
SEANA SMITH: While commodities are clearly in focus, you have gold notching another record. WTI crude, sitting back just above the $86 a barrel. We have seen this trend higher in both prices of crude and also prices of gold. Ines Ferré standing by at the big board with a closer look at some of the pricing action that we’ve seen, Ines.
INES FERRE: Yeah, Seana, and like you mentioned earlier, the pricing action when it comes to crude does not bode well for inflation. We are looking at WTI, that’s at around $86 a barrel right now. And I just want to show you a two-month chart, so you can see, it was around mid-March when we broke up above $80 a barrel, and it has stayed above this level ever since. Now, as far as what this could mean for the CPI print, look, if gasoline prices have been inching higher, this could impact that print it did last a month.
Natural gas prices surprisingly, those have been down on a year-over-year basis. But that doesn’t really translate into lower electricity costs as we have seen in recent months. Goldman Sachs saying that they do not believe that oil will reach $100 a barrel this year, and mainly because of geopolitical risks that are already baked into the price should anything change. You could see a pullback in oil prices and also spare capacity in the Middle East. He said, look, if OPEC plus countries see that you are getting to oil prices that are too high, they will increase their production.
They do not want oil prices to go so high that you start to create demand destruction. And finally, just to put a button on the gold prices that we have seen, look, eight sessions of gold going higher, even despite expectations perhaps that there may be less rate cuts this year, maybe even no rate cuts. You’re still seeing gold prices go higher. And this is because of central banks that keep buying up gold and also investors resolve in making sure that they protect their wealth. Guys.
