Oil and gold decline, bitcoin higher

Oil gains capped as OPEC lowers forecast

Crude prices pared gains after OPEC lowered their demand forecast for the first quarter and as the global equities lost their appetite for risk.  Earlier in the day, a fuel transport ship was struck at Jeddah’s port in Saudi Arabia.  This port is a high-security target so many energy traders were surprised crude prices didn’t jump much higher on the news.  Saudi Arabia noted no impact on fuel supplies after the terror attack and that the port has reopened.

OPEC+ also rescheduled their December 16-17th meetings till January 3-4th.   After the tense early December OPEC+ meeting that allowed for production to increase by 500,000 barrels, it should come as no surprise energy ministers welcomed delaying the meeting till January.

In the short-term crude prices are likely to be weighed down as vaccine rollouts slowly happen and as the holiday surges will keep large parts of the US and European economies in lockdown mode.

WTI crude is pushing higher towards the close as the dollar remains soft.

Gold down as Covid immunization gets underway

Gold prices are declining as COVID-19 vaccine immunizations begin, no-deal Brexit risks fade, and as uncertainty remains elevated on how the Fed will adjust policy following the rapid delivery of coronavirus vaccines.  Gold prices are looking vulnerable again but should once again be saved by the Fed.  The Fed is focused on the labor market and that short-term outlook is terrible given the current virus situation.  The US seven-day average of new COVID cases rose to a new high, albeit at a slower pace.  Economic scarring will undoubtedly make it easier for the Fed to continue to provide more accommodation and that could make many traders want to jump back in gold.

Gold prices should see strong support from the USD1800 level, but if that doesn’t hold bearish momentum could easily target the November low of USD1,767.

Will Bitcoin hit USD20,000?

Bitcoin got some momentum back last week after MassMutual’s USD100 million purchase in Bitcoin reinvigorated the belief that institutional money is still pouring into cryptocurrencies.  This week, Bitcoin is surging on news that Chinese state media believes Bitcoin could eventually cause long-term pressure on gold.  Bitcoin interest is not going away anytime soon and if risk appetite remains intact for most of the week, the USD20,000 level could be calling.

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 market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments 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 BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya