Oil and gold weaken, bitcoin remains robust

Oil loses ground on Covid jitters

Crude prices declined as global lockdowns appear to be a harsh reality for the first quarter.  The crude demand outlook over the next few months is bleak as US hospitalizations are at a record high, a new COVID strain could be spreading across Europe, and as skepticism grows over how quickly people will be willing to get vaccinated.

Despite all short-term pain for the global economic recovery, OPEC+ has provided confidence that their strategy should be supportive of keeping Brent around the USD50 level.  Oil prices appear to be following the overall risk appetite of the markets and have pared earlier losses.

 

Gold under pressure as dollar improves

Gold is under pressure as a deteriorating outlook triggers strong flows back into the dollar.  Now that Congress finally delivered a USD2.3 trillion year-end spending bill and fiscal relief package, gold will have to wait until next year for another strong catalyst.  The development of a new variant of the virus will likely trigger harsher restrictive measures across the globe, but additional support won’t be seen until next year.

Gold’s outlook is still very bullish as a gloomy global first quarter will keep all the major central banks and governments providing more support.  The holiday seasons are here and choppy conditions will remain in place for the precious metal.

 

Bitcoin remains in a bull market

Bitcoin is bouncing back as fintech companies continue to buy it.  PayPal and Square’s Cash App is providing underlying support for Bitcoin and it seems fresh retail interest is icing on the cake.  Bitcoin is still in a bull market as today’s gains occur as the dollar rebounds and the third-largest cryptocurrency gets caught up in a lawsuit with the SEC.  Thin conditions over the next couple of weeks could easily allow Bitcoin volatility to test the USD20,000 or USD25,000 levels.

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