Commodities and Cryptos: Oil price volatility, Gold slightly higher, Bitcoin eases ahead of SEC ETF decision

Oil

OPEC’s monthly report rattled energy investors as the cartel of energy producers grew cautious with oil demand.  The winter outlook was far from optimistic and that helped WTI crude fall further away from the $80 level.

Shortly after the OPEC report, President Putin spoke at an energy forum in Moscow.  Putin’s comments were mostly political posturing, noting that Russia is ready to supply as much gas as Europe needs.  Putin praised the Saudis and President Trump for reaching the 2020 oil deal.  Putin added that it is quite possible for oil prices to hit $100 a barrel.  Putin’s main agenda was to get Europe to approve Nord Stream 2, which would help lower their energy prices.

The fact remains that the oil market is still heavily in deficit and until confirmation is made about a crude demand slowdown, energy traders will buy every dip.  WTI crude still run higher and might not see profit-taking until prices get closer to the $85 level.

Gold

A Jekyll and Hyde inflation report sent gold prices on a wild ride.  Longer lasting inflation just went from rushing interest rate hikes forward to destabilizing large parts of the global economic recovery.  This week alone the market went from pricing in a potential December 2022 rate hike to having high confidence that September 2022 will be lift-off time for the Fed.

Gold prices are surging after a massive reversal with the 10-year Treasury yield.  Inflation expectations mixed with global growth concerns have made many investors nervous that the business and the consumer will be much weaker in the second half of 2022.  Safe-haven flows are starting to come gold’s way, whether it is speculation of a Biden tariff announcement or rising interest rates will destabilize many emerging market recoveries.

Gold has tentative resistance at the $1,800 level, but that might not prove to be too difficult to breach if risk aversion runs wild.

Bitcoin

July data showed that the US has become the leader in Bitcoin mining, clearly not surprising anyone following the massive investments made by Wall Street. China’s loss is the United States’ when it comes to Bitcoin mining.  Given the rest of the world is battling an energy crisis, it is no surprise that the US has had an easy path to take over the number 1 spot for bitcoin miners.

Bitcoin is consolidating around the $56,000 level as the cryptoverse awaits a potential SEC update over a Bitcoin ETF on Monday.  Bitcoin was unfazed by the latest inflation report that shows inflationary pressures in the economy remain elevated.  Bitcoin is not an inflation hedge today.

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