The Next Couple Of Days Will Be A Major Test For The Gold Market

It appears the next couple of days will be an important test for the gold market.

A Big Test
April 14 (King World News) – Fred Hickey:  I think the next couple of days will be a major test for the gold market. Assuming stocks decline hard on the disappointing cease fire talk news and oil prices begin climbing again, will gold follow the recent weeks’ pattern of falling along with stocks or are long gold positions mostly washed out (as the COT reports and low open interest and daily trading volumes suggest), the correlation breaks and gold resumes its bull market climb to higher heights?

Strait of Hormuz
Peter Boockvar:  … looking at the December contracts for both where WTI is up by a much more modest $1.70 and Brent by about $2 to $77 and $83 respectively. Keep in mind, the futures market is not predicting anything past today but that’s why stocks have been calmer of late than front month oil markets.

My opposite view is that now the US, and hopefully with help from others, is now going to block Iran from exporting about 1.5mm barrels per day, costing them about $150 million per day, if money talks the lack of fresh revenue will be painful and hopefully should bring Iran back to the table to end this effective closure for all, once and for all. And, I think that China behind the scenes is going to be a key US partner in cajoling Iran into making a deal because now China won’t get its Iranian oil shipments.

Until then, the economic pain points continue to grow. The weekend FT ran an article titled “European airports face jet fuel shortages within three weeks.” https://www.ft.com/content/801e46c7-cfb7-43c3-99bd-6a5ca971ceff?syn-25a6b1a6=1

Jet Fuel Crunch Forcing Airlines To Trim Flight Schedule
In the WSJ, “Jet fuel crunch is getting severe with no reprieve in sight for airlines.” The article went on to say, “China, a refining powerhouse, has stopped exporting jet fuel so it can meet its own needs, and airports across Asia, including in Vietnam and Myanmar, are already running out of supply. Europe is on the cusp of severe shortages as soon as May if the Strait of Hormuz isn’t fully reopened.”

More, “To cope, airlines are trimming their schedules and piling on fees. United Airlines has scrapped some red eye and midweek flights, while Air France is charging business class passengers more to offset the fuel burden of their heavier seats. Korean Air declared its own corporate emergency, telling staff to cancel all nonessential travel.” https://www.wsj.com/business/airlines/jet-fuel-crunch-is-getting-severe-with-no-reprieve-in-sight-for-airlines-ebab4c88

The US oil patch is still not responding to higher prices and again, looking at the back end crude oil futures market rather than front month in making drilling decisions. The Baker Hughes crude oil rig count was unchanged w/o/w and up just 4 since the war broke out, still hovering around the lowest level since September 2021.

Oil Companies Unwilling To Invest In Additional Rigs Because They Don’t Trust The Price Of Oil Will Remain High. This Bearish Mentality Is An Excellent Contrarian Sign For The New Bull Market In Oil

With respect to global bond yields, which are rising again today, the 10 yr JGB yield closed at 2.47%, matching the highest level since 1997. The German 10 yr bund yield is just 2 bps from a 15 yr high.

Japanese Bond Yields Highest Since 1997 As German Yields Close In On Highest Levels 15 Years!

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