Commodities and Cryptos: Oil weaker, Gold rout over, Bitcoin climbs – MarketPulse

Oil

Crude prices were ripe for a pullback but both the medium- and long-term fundamentals remain very bullish.  COVID vaccine success is solely responsible for the consistent upgrades to the US economic outlook that will lead robust demand for crude.  The crude demand recovery in the US will be a lot faster than anyone is anticipating and that will likely lead to a moment in the summer when supply can’t keep up with demand. 

 It has been a while since crude prices slumped alongside a weaker dollar, so today’s choppy trade could reflect hesitancy to have a big position before the EIA weekly crude oil inventory report.   The US production outlook will start to normalize now that refineries had another week to get utilization rates up.  Energy traders will want to closely watch how strong US production can bounce back and if that poses a risk for OPEC+’s  hesitancy to raise output. 

The bullish rally with WTI crude appears to be running out of gas, but it seems unlikely a major pullback will occur unless a major disruption to the US reopening of the economy occurs.   

Gold

Just like that gold prices have rebounded over $40, back above the $1700 level.  The global bond market rally has the dollar in freefall and that is providing a major boost for gold prices.  Gold’s reversal occurred a couple dollars before it officially fell into bear market territory.  The line in the sand was $1,650 for gold, so this emphatic rebound looks like it could hold. 

Right now, Wall Street looks like it is a one-way trade following Treasuries, but that could be good enough to form a key bottom for gold prices.  By no means, is today’s bond market rally the end of higher Treasury yields, but it could be big enough to attract many big institutional bets back into gold.

Bitcoin

Panic selling from the bond market has eased and that was just what Bitcoin needed to get its groove back.  The news on the crypto front was somewhat limited today, but did provide some further education on NFTs from Glenn Hutchin’s CNBC interview. 

The best thing for Bitcoin right now is for a healthy consolidation around the $50,000 level.  Investors need to start to see more stability from the cryptocurrency market in order to attract steady demand.  Right now, a lot of the active institutional money is on the sidelines waiting for the next 20% drop before buying back in.  Bitcoin could be poised to make another run at $60,000 level, if we continue to see risk appetite emerge from the global bond market rally.  

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst – The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya

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