Oil pares gains, gold eases, bitcoin pulls back

Oil pares gains

Oil prices are pulling back once again today, with WTI just below $53, off just over 1% on the day. We may be seeing a little profit taking in crude prices against the backdrop of a stronger dollar. They’ve been on a remarkable run in recent months but the dollar is enjoying a modest recovery which is likely to drag a little.

The outlook is still positive for crude, despite near-term risks to the economic outlook. OPEC+ has shown they’re more than up to the challenge of the pandemic and reaffirmed that last week, which is why prices remain buoyed and will likely be well supported. An interesting support level for WTI could be $50, should it pull back that far, not that there’s many signs it will at this stage.

USD keeps pressure on gold

The dollar rebound comes even as US yields ease off a little today, following Powell’s comments on Thursday. Interestingly, gold is showing some resilience, albeit from very low levels. It remains stuck in a range between $1,820 and $1,860, since plunging following the Georgia run-off.

If the dollar picks up any more steam, it could create near-term challenges for the yellow metal with major support levels not too far below. We could see some support around $1,800 should $1,820 fall, with $1,765 then being a major level below.

Bitcoin stumbles at $40,000

Bitcoin fell just short of $40,000 following its impressive rebound from its fall at the start of the week. It remains in a strong position despite pulling back once again, with the sell-off not generating any significant momentum yet, by bitcoins own standards.

Obviously, being a highly speculative instrument means that could change very quickly in either direction. A break above $40,000 could be the catalyst for another powerful rally, with a new high opening the possibility of a rapid rise to $50,000.

Downside risks are always present with bitcoin and while $35,000 may provide an interesting test, the only level that really matters is $30,000. A break of this could trigger a much sharper correction.

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