Oil gets a boost from CPI and EIA reports, Gold wavers, Bitcoin profit-taking

• Oil nears 2023 high
• Gold will have to wait for its record run
• Bitcoin rally exhausted as profit-taking settles in

Oil

Crude prices are rallying after a moderating inflation report was followed by an EIA report that highlighted tightness at Cushing and strong gasoline demand.  In addition to a double dose of bullish reports, oil got a boost from Energy Secretary Granholm’s comment that said the US wants to soon bring back the Strategic Petroleum Reserve (SPR) back to pre-Ukraine War levels.  She didn’t specify when and if they would be buying at different levels than what they have already signaled in the past.  The Biden administration has signaled that they would be buyers of crude at or below the $67-$72 a barrel range.

When you take a look at how stocks and other commodities have reacted to this morning’s CPI fireworks, the rally in crude really stands out. Oil looks like it could be breaking out here.

Gold

Inflation is not slowing enough for gold to make that record run.  Gold prices initially rallied after Wall Street saw consumer prices post the slowest rise since May 2021.  This inflation report is promising for disinflation trends but it doesn’t mean the Fed’s tightening work is done.  Fed swaps were volatile and some traders were thinking that maybe the Fed would hold off on that May hike, but it seems the market is thinking one more and then they are done.

The Treasury yields (2-year and 10-year) tumbled following the inflation report release but have pared losses, while the 3-month government bill remains elevated and unfazed.  Gold’s bullish outlook remains intact, but it seems prices may be stuck in a consolidation phase until we have a clearer outlook for the economy.

Bitcoin

Bitcoin profit-taking is intensifying after prices surged following the knee-jerk reaction to the inflation report. It seems the momentum rally for Bitcoin might be over for now.  Inflation hedge and or a breaking of its correlation from equities might subside for a while.  Bitcoin looks poised to consolidate here as it will clearly need a robust catalyst to keep the rally going.  Downside support should come from the $27,500 region.

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