Commodities and Cryptos: Oil surges, Gold hovers around $1800, Bitcoin $40k ceiling may get tested

Oil

Crude prices seem to have a one-way ticket to $100 oil.  This week’s rally in crude was supported by the OPEC+ decision to stick to their gradual increase strategy and as US production fell again.  An artic blast is also disrupting some production in Texas and that is driving this latest price surge.

Initially crude prices pared gains after a shockingly strong NFP report sent yields and the dollar higher, but that was short-lived as energy traders realized that the key takeaway is that the Omicron wave did not lead to a major hiccup for the economy.

Everything seems to be turning very bullish for WTI crude and the bullish momentum might not see much resistance until the $95 level.

Gold

Gold prices got knocked down after a surprisingly strong nonfarm payroll report sent expectations soaring that the Fed’s near-term tightening will be much more aggressive. Talk of a half-point interest rate increase by the Fed in March is having many traders have to price in another rate hike this year by the Fed.  Today’s NFP report exemplifies the growing concern that the Fed has taken too long to tackle inflation.  Leading up to the March FOMC, this NFP report was not supposed to have a meaningful impact on rate hike expectations, but this was a shocker and has shifted Fed 2022 rate hike expectation ranges from 3 to 7 rate increase to at least 4 to 7 hikes.

The knee-jerk reaction for gold was a collapse below the $1800 level.  The $1800 level is key for gold and if gold can continue to hover around it, that would be very positive for bullion bulls. If gold breaks below $1780, conditions could get treacherous and prices could see significant momentum selling target towards $1700.

Bitcoin

One of the most difficult environments for Bitcoin to face is surging Treasury yields.  Today’s nonfarm payroll report was a shocker that sent Treasury yields higher as expectations for much more aggressive Fed tightening increases.  Bitcoin pared earlier gains that stemmed from a tech-driven rebound that was sparked by Amazon.  Bitcoin may have difficulty breaking above the $40,000 level if Wall Street grows confident that the Fed will raise rates by a half point in March.

Bitcoin shrugged off the payroll slump and is rallying on momentum buying.  The $40,000 ceiling may get tested.

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