Commodities and Cryptos: Gold higher, Oil stronger, Bitcoin breakout nearing

Oil

Crude prices are struggling to close out the week on a high note over fears of a US hiring slowdown could be a short-term drag for the demand outlook.  Normally, a weaker-than-expected employment report sends the dollar lower and supports commodity prices, but today’s release did not do that.  Oil prices have been mostly supported over news that the Gulf of Mexico production is still mostly down.

Exxon had to resort to the US Strategic Petroleum Reserve to bring back gasoline production, which shows the energy market will do whatever it takes to keep production going and that put a cap on the recent rally in oil prices.

WTI crude is consolidating below the $70 level and that will likely remain until energy traders have a better handle on how quickly production and refining activity will resume post Ida.

Gold

This is the moment for gold bulls.  A softer-than-expected employment report and wage inflation might be what is needed to help gold prices breakout higher.  Today is a rare day that saw Treasury yields and gold prices rally together.  Gold’s rally that stemmed from Fed Chair Powell’s dovish tapering speech last week did not see much follow through, but that could change now.

Gold’s short-term outlook just turned very bullish now that a September taper is completely off the table and November is not a sure thing.  The US economy will keep seeing inflationary pressures and that could be the catalyst for gold to get its groove back.

If gold breaks above $1850, bullish momentum might not have too much trouble rallying towards the psychological $1900 level.

Bitcoin

Bitcoin’s $51,000 barrier was tested after the nonfarm payroll report complicated the Fed’s path towards tapering asset purchases.  Bitcoin bulls are anxiously awaiting the next wave higher as momentum seems to be just around the corner.

More executives are embracing cryptos and the next major leg higher seems to be nearing.  A couple weeks ago, the Deloitte Blockchain survey clearly shows interest is not easing as 76% of executives across industries anticipate digital assets will replace fiat currencies in the next 5-10 years.

The next spotlight in the cryptoverse will be how successful adoption goes for El Salvador when Bitcoin becomes legal tender next week.  Bitcoin may see weekend volatility support another spike higher, but whether or not it holds for when Asia opens next week is the big question.  The $52,000 to $52,500 region could prove short-term resistance, with the $55,000 level likely being the key resistance level for next week.

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