Commodities and Cryptos: Oil lower on EU COVID relapse, Gold lower on strong USD, Bitcoin buyers emerge after near 20% slide

Oil

Crude prices continue to get punished as rising COVID cases across Europe threaten the short-term outlook. Over the past two weeks, the energy market went from thinking a worsening oil market deficit and global energy crisis could trigger $100 oil prices, to fearing a pandemic relapse in Europe could trigger a blow to the short-term crude demand outlook.

WTI crude is breaking below some key technical levels (psychological $80 level, the 50-day SMA ($78.67), and the July high of $76.98) and momentum selling could support a move towards the $74 level. If Germany announces a national general lockdown over the next week, that could trigger another 3% decline with oil prices.

Most of the headlines are short-term bearish for crude prices, but the oil market deficit should still last despite Austria’s nationwide lockdown for 20 days and Germany’s latest restrictions. Resistance to mimic Austria is a given, so traders should quickly find out if the short-term pullback is almost over.

Gold

Gold prices are declining after some hawkish Fed speak about accelerated tapering boosted the dollar. Fed’s Waller favors a faster taper given the trends with inflation and jobs, while Fed Vice Chair Clarida hinted that the Fed might need to consider the pace at which tapering is done at the December policy meeting. Gold is stuck in a broadening formation and that should remain the case given next week’s shortened trading week. Inflation and Fed speak are the primary catalyst for gold and right now traders will need to see what happens over the next couple of weeks before having strong conviction on assessing what the Fed will do regarding interest rates.

Bitcoin

Bitcoin is having a terrible week as the dollar sees strong gains on safe-haven flows over rising risks to the global economic outlook and as crypto traders shift their focus to altcoins, such as Ethereum and Binance Coin. Bitcoin almost fell to bear market territory, but most long-term investors remain unfazed. Some dip buyers are emerging now that Bitcoin has almost fallen 20% from the record highs made earlier in the month.

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