Oil gains ground, gold rallies

Oil running on fumes

Oil prices up around 1% on the day, with Brent holding on above USD50 after slipping as low as USD49 on Monday. The moves show the ongoing support for crude prices in the aftermath of the OPEC+ deal but I do wonder whether it’s starting to run on fumes. Momentum looks to be fading and near-term risks are undoubtedly to the downside as harsher restrictions are imposed around the world.

London became the latest to fall into tier-three this week and ministers are reportedly rethinking rules around the holiday period, as families prepare to gather. Europe as a whole is enforcing stricture lockdown measures and the US won’t be able to avoid it for much longer given the state of play going into the festive period. January is looking pretty grim at this point. That could trigger some profit-taking in crude prices in the near-term.

Gold rallies ahead of the Fed

Gold is enjoying a nice rebound today, having fallen as low as USD,820 at the start of the week ahead of tomorrow’s Fed decision. The yellow metal is up more than 1% today and pushing US1,850 again, rebounding nicely of the 50 fib from the late November lows to last week’s peak. Whether it’s all upside from here or not may well depend on whether the Fed can deliver tomorrow, with the central bank doing so at a time when Congress has not passed any relief of its own.

The Fed is used to being the only game in town, this time it will have been hoping that wouldn’t be the case. But as far as it’s concerned tomorrow, bold measures may be necessary in case lawmakers on Capitol Hill fail to deliver, which could be very good for gold prices.

Will the Fed give bitcoin an early gift?

Bitcoin is finding its groove again ahead of the Fed meeting. Whether you believe all of this central bank easing is bullish for cryptos or not in the long term isn’t really relevant. If enough buyers believe it to be the case, or just that it will be bullish for cryptos right now, it will happen. And we may be seeing prices rising on the anticipation of just that. Will the Fed propel bitcoin into uncharted territory and deliver a Santa rally stock markets could only dream of? It’s very possible.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam