Commodities and Cryptos: Oil tumbles on strong $ and as US considers options, Gold thanks BOE and Fed, Bitcoin endorsed by Adams

Oil

Crude prices are sharply lower after the Biden administration signaled the US will consider a full range of tools to stabilize oil prices.  This was an easy and quick OPEC+ meeting on output.  At no point did OPEC+ consider changing their output strategy, which was completely the message they had going into today.

Saudi Arabia anticipates that the oil market deficit will end in the first quarter of next year and that is largely due to concerns over the short-term crude demand outlook.

The selloff in WTI crude won’t last long as the oil market is still in deficit and whatever response the US has will likely be temporary relief and nothing that brings US production back to the levels seen under the Trump administration.  The mid-$70s should prove to be a very attractive entry for energy traders.

Gold

Gold prices got a trifecta of central bank action that is revitalizing bulls: First a dovish Fed taper, then a surprise hold on interest rates by the BOE, and as surging inflation forced the Czech National Bank to raise borrowing costs more than expected .  Major economies are turning dovish as developing countries scramble for inflation-hedges.

Even as US stocks continue to make fresh records, fixed income traders are sending Treasury yields across the curve sharply lower.  Recently, tumbling Treasury yields would lead to dollar weakness but that is not happening today.  The FX market would have you believe that Wall Street is having a bad day, as the Japanese yen is the best performing currency, with the dollar in second place.

If the Fed and BOE are both in the early stages of a policy mistake, that is great news for bullion.  A scramble to tighten, would ultimately choke growth and lead to significant safe-haven demand for gold.

Cryptos

The Shiba Inu bubble is popping.  This parabolic move lasted a lot longer than it should have, but the end of the Shib craze should help retail to focus back on Ethereum and Bitcoin.

NYC Mayor Eric Adams tweeted, “In New York we always go big, so I’m going to take my first THREE paychecks in Bitcoin when I become mayor. NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait!”  This is a positive story for Bitcoin, but will unlikely move it off session lows.  Adams is unlikely to lead the next wave of mass adoption with Bitcoin.

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