Commodities and Cryptos: Gold awaits inflation data, Oil’s deficit is not going away, Litecoin’s Fake News

Gold

Gold prices are steadying as investors await the August inflation report, which could deliver some signs that inflation is transient.  If US inflation appears like it will hover above 5% for the rest of the year, that could be the catalyst to send both Treasury yields and the dollar higher, which would be bad news for gold bulls.  The COVID impact on pricing pressures still remains elevated, but eventually inflation will fall and gold will resume rising.

Gold appears stuck below the $1800 level and could see a major selloff if the annual growth in the US consumer prices comes in hotter-than-expected.  Consumer prices in August from a year earlier are expected to ease from 5.4% to 5.3%.

Gold will likely consolidate leading up to the inflation data, but the delta variant shock to supply chains will likely show some positioning for an upside surprise for tomorrow’s inflation data which could send gold lower.

Oil

Crude prices are rising as Gulf of Mexico production will likely see some delays from Tropical Storm Nicholas and after OPEC raised their 2022 global oil demand growth forecast.  Almost half of oil supply in the Gulf of Mexico is down and this latest storm could disrupt some terminals that are being repaired.  Hurricane season still has over two months left, so energy traders will hesitate completely pricing in a return to normal.

Last week, reports circulated that OPEC could revise lower its 2022 oil demand growth forecast, so today’s increase of 0.9 mb/d from last month’s report is a nice surprise.  OPEC expects demand to improve by 6 mb/d in 2021 and 4.2 mb/d in 2022, which means this market will stay in deficit this year but that should change in the first quarter.

WTI crude is on the verge of breaking out back towards the summer highs if US stockpiles continue to decline and if expectations grow for a normal holiday travel season.  A big driver for crude demand will be if unvaccinated children (5-years to 11-years old) get the greenlight for a COVID vaccine by next month.

Cryptos

Litecoin, a cryptocurrency that has fallen off many traders’ radar surged earlier after a fake report claimed it had formed a major partnership with Walmart.  Litecoin prices rallied over 30% to $235.75 and then quickly came crashing down after Walmart and Litecoin refuted the fake press release.

The cryptocurrency market has been eagerly awaiting the next round of corporate America endorsements, so it should not come as a surprise that the Litecoin news traveled quickly.  Given the overall recent bearish sentiment in the cryptoverse, the bad players behind this press release knew they would have an easy time pumping and dumping Litecoin.

The Litecoin hoax did not do any favors for sentiment and all the major coins are lower.  Bitcoin is tentatively breaking below key support, which means buyers might not emerge until prices decline towards the $40,000 level.

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