Crude prices are rebounding as the rout that stemmed from delta variant concerns has run its course. The oil market is still heavily in deficit and after a 14% pullback, energy traders need to pounce on this buying opportunity.
The headlines for crude have been mostly constructive, but the primary driver has been the overall risk-on theme that stemmed from Senate’s passing of the $1 trillion bipartisan infrastructure spending bill. Moderna and Canada’s government made a deal to create a messenger RNA vaccine factory which should help their pandemic response capabilities. Citigroup also made the decision to require vaccines for workers to return to the office. More companies are requiring vaccines and that should be very positive for winning the battle against COVID-19.
Despite a stronger dollar, WTI crude is rallying, but a swift rebound will prove difficult as dollar momentum grows from a much steeper yield curve.
Gold prices are steadying as investors start to price in an economy that is no longer fueled by massive monetary and fiscal stimulus. Gold’s worst enemy is a stronger dollar and that might remain the theme until the Fed makes the formal taper announcement. Traditionally when the taper starts it should be bullish for Treasuries and thus supportive for gold.
The technicals look awful for gold, but if prices could stabilize between $1700 and $1750, that might allow some longer-term investors to scale back in.
Bitcoin mania is taking a break after the recent surge shows signs of exhaustion. A lot of the good news has already been priced in, but if that theme continues, Bitcoin should not struggle to rally to $50,000. Votes of confidence from Venmo and AMC are important for keeping the bullish theme going for cryptocurrencies.
Profit-taking was triggered for some cryptocurrency traders after President Biden’s infrastructure bill, which as it stands will include new crypto tax-reporting rules passed the Senate.
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