Gold recovers to $1,800 level as WTI dips $2.0 but is still expected to end the week higher

The front-month futures contracts for West Texas Intermediate, or WTI, the US benchmark for sweet light crude oil, dropped little more than $2.0 on Friday to just below the $92 per barrel level. A damaged oil pipeline that had halted output at seven offshore oil rigs in the US Gulf of Mexico was being closely followed by traders.

Despite rumors that as much as 410,000 barrels per day of supply had been cut off on Thursday, reports on Friday stated that the pipeline is anticipated to be mended by Friday's end of the day, allowing for a return to business as usual. WTI is expected to conclude the week over $3.0 in the black despite Friday's decline, but technicians still believe it is in a downturn that may push prices as low as the mid-$80s per barrel.

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This week's conflicting signals regarding the future for oil demand have been a challenge for oil traders. For instance, the US oil inventory data for this week was peculiar, showing a huge, unexpected increase in headline stockpiles (bearish), but a significant decrease in gasoline stocks (bullish). In the meantime, the International Energy Agency this week revised its prediction for the growth of oil consumption in 2022, citing rising demand for oil amid "switching" away from gas as costs rise. In the meantime, OPEC revised its projection for 2022 demand growth in its monthly report, which was also released this week.

Copper prices fell on Friday as a strengthening US dollar rendered the red metal priced in USD more expensive for foreign purchasers. Last time, copper was down approximately 0.4% and back under $3.70. Data from China released on Friday revealed that the country's loan growth in July was substantially lower than anticipated, which also affected the industrial metals market's mood to some extent. The largest copper consumer in the world is unquestionably China.

However, copper prices are still expected to have increased by more than 3.5% this week, bringing their gains since their mid-July lows under $3.15 to almost 18%. Although recent economic data from China has been spotty at best, government initiatives to revive the economy have boosted confidence in the industrial metal market. The copper market has also received attention, with key manufacturers recently revising lower their output predictions and stocks in significant Chinese/London warehouses under pressure.

On Friday, despite the stronger US dollar, gold prices rose again to the $1,800 per troy ounce level. The adverse US inflation shocks over the past few days have diminished concerns that the Fed would need to raise rates aggressively in the coming quarters, which would likely be bad for the precious metal. As a result, the precious metal seems set to close the week about 1.4% higher.