Oil and gold steady, bitcoin jumpy

Oil consolidation continues

Oil prices are a little higher at the start of the week after slipping on Friday. We’re seeing a little consolidation after a strong run since early November. This may even lead to a minor correction but the outlook remains positive for crude prices, with OPEC+ backstopping any temporary demand disruptions caused by the pandemic.

One downside risk for oil is US shale, something Russia, in particular, is all-too-aware of. Should the industry ramp up production at these much more favourable levels, it could be problematic for the group and there’s only so much Saudi Arabia can do alone. It made a big sacrifice at the last meeting in order to get an agreement over the line, but that’s not sustainable in the long run.

 

Gold edges higher ahead of Fed

Gold prices are up a little after a rough ride on Friday. The yellow metal has faced challenges from a resurgence in the dollar. We’re now seeing it consolidate a little around USD1,850, something that may continue unless we see a breakout in the dollar index. It is currently in a tight range, with support at 90 and resistance at 91 and a breakout in either direction could be the catalyst for a similar move in gold. It could be an interesting week for gold, with the Fed holding its first policy meeting of the year on Wednesday.

 

Bitcoin continues to look vulnerable

Bitcoin is seeing some consolidation itself after surviving another run at USD30,000. It has rebounded back towards USD33,000 but we haven’t yet seen anything that suggests this support level won’t come under threat again. Another run at it could start to make speculators nervous and may see it buckle. A move back above USD35,000 may start to change the conversation but the trend is against it these last few weeks and a move lower still looks more likely.

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