Oil higher despite IEA outlook
Oil prices are rising again today, buoyed alongside risk assets by the prospect of a very expansive fiscal policy under the Biden administration. A slightly softer dollar over the last couple of days may also be playing a role in lifting oil prices back towards their recent highs.
The IEA may have revised down oil demand forecasts for this year but that is not unexpected, given the circumstances and OPEC+ has been effective in addressing any imbalances caused by that.
The question now is how much further this can go, with so much positivity priced in and downside risks remaining on the demand side. There still seems to be plenty of positive momentum in crude markets right now which could support prices in the near-term.
Gold gains but dollar a risk
Gold is making decent gains once again today, taking its winning run to three days and looking to significantly break through USD1,860 and propel it off its recent lows. The yellow metal has built up strong support around USD1,800 where it was heavily defended on a couple of occasions.
A break through USD1,860 would reinforce this and could drive it back towards USD1,900. Of course, that will depend on how the dollar behaves, with it having come back into favour this month. We’ve seen it pull back the last couple of days but already today it is making steady gains. That is a downside risk to this gold recovery.
Bitcoin having a wobble?
Bitcoin is coming under a little pressure today, finding support once again around USD34,000 which is starting to look increasingly significant. A break of this may be a cause for concern in the near-term, with USD33,000 then looking quite vulnerable. Ultimately, the only level that really matters is USD30,000 but should we see a run at that, it would be a massive test of the belief in the rally that saw prices more than double after hitting USD20,000 for the first time. A break of USD30,000 could see us heading back there once again.
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