Commodities and Cryptos: Oil’s choppy trade, Gold eases, Bitcoin stumbles

Oil

Crude prices remain very choppy as energy traders await a decision from the Biden administration over an SPR release. It seems the energy market is convinced that even if the US resorts to tapping the strategic petroleum reserve, the benefits would be minimal and yield little benefit to the US consumer.

The oil market deficit seems likely to last a while longer as the Biden administration seems unwilling to ask US shale to increase production. OPEC+ has the oil market right where it wants it and they will now likely benefit with $80 oil at the minimum over the next couple of years.

Gold

Gold clearly has a short-term barrier at the $1880 level. Gold prices were unable to get their groove back as a strong dollar emerged after US stocks attempted to make fresh record highs and after another round of hawkish comments from Fed’s Bullard. Bullard noted, “think it behooves the committee to go in a more hawkish direction in the next couple of meetings, so we are managing the risk of inflation appropriately.”

Gold’s bullish trend remains intact but exhaustion from the recent rally could see prices drift towards the $1825 level.

Bitcoin

A strong dollar helped Bitcoin take a quick dip below the $60,000 level before stabilizing. Another futures-based Bitcoin ETF started to trade, but that did not really move the needle in attracting new investors. Bitcoin has entered a consolidation phase as investors are in wait-and-see mode to see what happens with inflation. Bitcoin may continue to attract inflation hedges, but if pricing pressures trigger rapid rate hiking action from the Fed, that could trigger a massive wave of risk aversion that would penalize cryptos.

Bitcoin and Ethereum seem poised to finish the year as one of the top performing assets, but if we see Wall Street grow nervous over a policy mistake by the Fed, cryptos would get hammered. Bitcoin’s longer-term outlook is still much higher, but the short-term outlook is cloudy at best.

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