Oil rally, bullish gold case weak, bitcoin lower

Oil at two month high as OPEC struggles to hit quotas

Oil prices are continuing to climb at the end of the week as unrest in Kazakhstan and lower output from Libya further hamper producers’ ability to gradually return to pre-pandemic levels. We are already seeing OPEC+ struggle to deliver the agreed 400,000 barrel per day increase and this is further exacerbating the problem.

And it’s happening at a time when demand is expected to remain strong thanks to omicron symptoms being mild by comparison to other variants. It’s no wonder prices are almost back at November highs, with WTI now back above $80 for the first time in two months.

The bullish case for gold is weak

Gold is marginally higher on the day after experiencing a surge in volatility around the release of the jobs report. The yellow metal spiked in the immediate aftermath of the release, with the big NFP miss hitting the dollar. But as is so often the case on jobs day, the knee-jerk reaction to the headline NFP number turned out to be the wrong one overall, and the move was quickly reversed. Volatility has remained since but it appears to be settling a little higher than pre-NFP levels. 

There’s a lot to digest in the jobs report and it can sometimes take a little time for that to happen. Ultimately, the takeaway has to be that the report doesn’t make rate hikes or balance sheet reduction any less likely, especially with wages rising as much as they did. That’s not good news for gold and so the bullish case remains weak as it struggles to get a hold of $1,800 again.

Jobs report delivers a blow to bitcoin

It would appear bitcoin traders weren’t particularly thrilled with the jobs report either, with the cryptocurrency adding to its post-Fed losses in the immediate aftermath of the release. If loose monetary policy has been one of the major catalysts for the bitcoin boom this last couple of years then the crypto crowd may be in for a rough 2022 as central banks, Fed included, are in tightening mode. And today’s wage growth figures will only further galvanize them into acting to slow the pace of inflation. Somehow I don’t think they’ll be deterred for too long.

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.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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