Commodities and Cryptos: Crude rally continues, Gold bounce, Bitcoin rises

Energy Prices

Crude prices continue to rise over Ukraine-Russia tensions, supply likely to remain tight into the summer, and surging demand on reopening momentum and improving temperatures across Europe and Asia.  January has been a great month for oil prices and $100 oil might not be too far away as expectations are high that supply will not come close to catching up with demand as OPEC+ will deliver gradual production increase targets that they will fall short of reaching. 

Many energy traders are eagerly awaiting tomorrow’s earnings results from Exxon, which should show they are remaining disciplined with capital expenditures.  The oil market is likely to remain very tight given the geopolitical risks and slower production increases despite high crude prices as oil giants focus on clean energy transition.

Gold

Gold prices are bouncing back as the dollar rally appears to be over.  Gold’s rebound may have gone too far already as many traders are still looking to fade any rallies until after the first Fed rate hike.  Gold will struggle over the short-term over hawkish Fed rhetoric that should remain the constant theme that will disrupt any safe-haven flows that stem from geopolitical concerns or Chinese weakness.

Gold’s kryptonite remains surging real yields and that trade seems poised to continue as the surge with inflation is far from over. The Fed is not done with their aggressive shift to tightening and gold could see further short-term pressure before bullion investors have the greenlight.  Gold’s medium- and -long-term outlook remains bullish as valuation disappointment and growth concerns will become the dominant theme on Wall Street in the second half of the year.

Bitcoin

Bitcoin is rallying as risky assets finish a very bad January on a positive note.  Bitcoin bullish momentum is slowly building up and it could surprise to the upside if the dollar continues to weaken as much of the Fed tightening for the year begins to get priced in. Bitcoin’s most likely scenario is to continue to consolidate here, but if risk appetite remains firm in February, a lot of money on the sideline is ready to pounce.  

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