Commodities and Cryptos: Oil surges post EIA report, Gold stumbles post hawkish FOMC, Bitcoin bounces back

Oil

Crude prices rallied after US stockpiles tumbled to the lowest levels since October 2018.  Oil market fundamentals are turning bullish again as the China slowdown fears ease, supply shortages with natural gas could lead to increased demand for oil, and as White House is expected to continue to support renewable energy, likely keeping deterring big investments into new oil wells.

The FOMC decision sent the dollar on rollercoaster ride that led to a slightly stronger dollar that helped oil prices pare today’s gain.

Gold

The gold price rally from the somewhat dovish Fed statement/projections was short-lived after the Fed Chair Powell’s presser signaled substantial progress has been achieved on inflation, which could suggest hotter-than-expected readings could lead to a more aggressive Fed.  Demand for safe-havens did not get any favors from Powell as he noted that the Evergrande crisis seems very particular to China and that the corporate debt defaults in the US are very low.  Powell emphasized the importance that the debt ceiling is raised in a timely fashion, which keeps the pressure on Congress.

Gold is losing its luster after a modestly hawkish Powell signaled a gradual tapering could end in the middle of next year.  If China remains aggressive in supporting the economic recovery and if the Evergrande crisis continues to de-escalate, gold could quickly give the majority of this week’s gains.

Bitcoin

Bitcoin may have got its groove back after dangerously piercing below the psychological $40,000 level.  It has been a rough couple of weeks for Bitcoin, but optimism still remains that entire crypto space is able to handle some of the regulatory actions that are looming.  The Treasury unveiled its first round of sanctions on crypto exchange Suex.

Some investors are anticipating a US Bitcoin ETF as the next big catalyst for Bitcoin to make another run higher.  Bitcoin held onto its gains despite the stronger dollar that emerged post Fed.  Bitcoin showed impressive resilience during the Fed, well outperforming gold and US stocks.

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