Commodities and Cryptos: Oil sinks on Delta Variant concerns, Gold softer, Bitcoin

Oil

COVID-19 variant concerns are dragging down crude prices. The robust crude demand outlook is starting to take a hit as many countries continue to struggle with the more infectious Delta variant. Even the US is seeing a surge as low vaccinated states are behind the 47% increase in cases over the previous week. England will end lockdown rules on July19th even though they might see a surge in infections leading to 1,000 to 2,000 people being admitted to the hospital daily till the peak in August. This pandemic once again feels far from over and that is dragging down optimism for a robust crude demand story going forward.

Energy markets are also expecting several days of posturing amongst OPEC+ members. Saudi Arabia and the UAE will eventually be forced to reach an agreement on boosting production otherwise, they risk ending stable prices going forward.

WTI crude seems vulnerable for further weakness given how much prices rallied over the past few months.

Gold

Gold prices softened on low trading volumes as the dollar firmed up on safe-haven flows. Bullion traders are waiting to see if inflationary pressures continue to simmer across the economy. Right now the gold market is all about the upcoming US CPI data and not so much safe-haven flows from the spread of the Delta variant.

Gold should remain stuck around the $1800 level until investors decide whether or not Treasury yields will remain flattish. Gold prices could eventually strongly rally if Wall Street begins to believe once again that longer-term structural drivers will make it difficult for rates to go up. Gold has massive resistance around the $1,835 level, which on a break could pave the way for a run towards the $1,870 level.

Bitcoin

A strong dollar and some freeing up of cash ahead of a busy week saw cryptocurrencies weaken across the board. News of Plan B passports and concerns of El Salvador’s Bitcoin adoption didn’t provide much of a catalyst to start the trading week. Bitcoin remains confined to its $30,000 to $40,000 trading range.

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 senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street 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 CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya