- Energy traders carefully monitoring for any Russian-Saudi tensions
- Hawkish data and debt deal optimism weigh on gold
- Cryptos benefitting from today’s broader market rally
Crude prices are rising after another round of impressive economic data exemplifies how resilient the US economy remains. Debt deal negotiations appear to also be heading in the right direction, but talks could easily fall apart as the far wings of both parties will need to make concessions.
Energy traders might refrain from any aggressive positioning over the weekend until further signs of progress in debt-ceiling talks occur. The upcoming week could deliver a make-or-break moment for oil as we will see if Chinese manufacturing is rebounding, if the US labor market is reading to soften, how oil giants Exxon and Chevron address climate ambitions at their AGMs, and what if the Saudis and Russians can reach agreement on what to drive OPEC+ do with output.
Gold’s rough week is ending as some investors seek protection in case debt ceiling talks hit a major roadblock at the 11th hour. It is crunch time for DC and a possible TARP scenario could occur (when Congress initially failed to pass the bank bailout program), which is why some traders are running to gold ahead of the long weekend. If it weren’t for another round of hawkish data, gold would be finishing the week on a much stronger note.
Gold is in the danger zone as optimism remains that a debt-ceiling standoff will be resolved and as US economic resilience will force the Fed to keep rates higher for longer. Gold can benefit if inflation doesn’t prove to be too sticky and the labor market starts to soften. The week ahead will provide clarity on what happens with the US default watch and if the US economy remains too strong and warrants further Fed tightening.
Bitcoin is taking part in today’s broad market rally that stemmed from debt limit talk progress. With Bitcoin near the lower boundaries of its recent trading range, improving risk appetite is welcome news for crypto traders. The rally is somewhat small and could be short-lived as once we get a debt deal in place, the focus will shift to the Fed and potentially a couple more rate rises, which is not good news for crypto-startup companies.
This week we were reminded that the key to Bitcoin’s success in the US might depend on the upcoming presidential election. Florida governor Ron Desantis announced his intentions to run for president and appears poised to ‘protect’ Bitcoin. Desantis told Elon Musk this week that, ““You have every right to do Bitcoin. The only reason these people in Washington don’t like it, is because they don’t control it.”
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