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Commodities and Cryptos: Energy crisis keeps pushing oil higher, Gold steadying, Bitcoin eyes $60K

Oil

Energy crisis uncertainty will likely keep crude prices heading higher until the oil market seems likely it is heading towards balance.  The natural gas shortage is not going away anytime soon and that will keep providing additional demand for crude. 

Normally stockpiles grow around this time of the year, but they are currently tightening.  The Biden administration knows that $90 oil as we head towards the midterm elections could spell disaster for his fragile blue wave.  Biden will continue to press OPEC for more output, but they won’t rush to deliver more crude until they are certain winter demand will warrant it.  The US will eventually seriously consider using the strategic petroleum reserves (SPR) if we see $90 oil and further momentum looking like $100 won’t be hard to achieve. 

WTI crude will remain very volatile, but if spreads continue to show signs of tightness, prices will continue to rally. 

Gold

With bond markets closed for holiday, gold prices are steadying as investors await the release of US inflation data.  Gold looks like it could be forming a base as risks to the outlook continue to grow.  Gold is starting to attract some safe-haven flows as US growth forecasts continue to get chopped down, supply chain issues show no major signs of easing, and as many central banks seem poised to enter rapid tightening cycles, which could derail dollar dominance.   

Gold is hovering ahead of the $1,750 level as Wall Street has completely priced in a November Fed taper announcement.  Inflation pressures are likely to keep the steepener trade going and that will be bad news for gold in the short-term until investors start to grow worried that the 2022 outlook will deteriorate even further. 

Bitcoin

As Bitcoin enters overbought territory, crypto enthusiasts remain relentlessly bullish.  Bitcoin can trade very technically, but sellers completely understand they need to abandon any short bets if a pullback does not quickly present itself. Bitcoin is benefiting from consistent new investment in the crypto space:  Billions of dollars are being raised for various funds, traditional finance scrambles to embrace blockchain technology, and as slowing economic growth forecasts suggest governments and central banks may delay the removal of stimulus. 

The global energy crisis is leading to blackouts, food shortages, and worsening economic conditions that will force many individuals to seek protection from fiat currencies.  Lebanon is the latest example of how bad economic conditions can get, which might start to make Bitcoin look attractive for many individuals who are staring at a nightmare situation.

Bitcoin will likely need a fresh catalyst to make $60,000 happen, but if that happens quickly, record highs might not be hard to reach.  

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 [4]

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