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.
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