- Oil is currently finding a bottom to improve demand optimism
- Gold is stuck in a tight range; hovering around the $2000 level
- Bitcoin traders remain in wait-and-see mode on the regulatory front
Oil
Crude oil prices rebounded after a better-than-expected German sentiment report and as energy traders began to see Europe struggling to reliably replace Russian crude. Oil’s rough week last week had too many holes in the short-term crude outlook, but some of that pessimism may dissipate this week if earnings continue to impress and if the US quarter shows solid 2.0% or better Q1 GDP readings.
Earlier today, a pair of tankers gave up after waiting almost a month for Iraqi Kurdish oil. This is a reminder that the oil market is going to remain sensitive to replacing the sour crude it got from Russia. Not all raw materials are the same and can easily replace each other.
WTI oil is also getting a boost from a weakening dollar, and that trade could continue through most of the year as the Fed is likely to be priced in to deliver more rate cuts than the other major central banks.
Gold
Gold is trying to get back to where it belongs, above the $2,000 per ounce level. A weakening dollar is helping to send bullion higher as investors become more confident that the Fed will have to deliver more rate cuts next year. Wall Street sees something breaking, and that allows the Fed to shift gears from its inflation-fighting mode.
Gold will benefit from safe haven flows and continued momentum as Treasury yields fall as Fed rate bets grow. Gold’s bullish outlook is based on the risks on the table: earnings risk, slower lending, concerns about financial stability and flat inflation.
Bitcoin
Bitcoin remains heavy until investors get some clarity on the US regulatory path on crypto. Despite a weakening US dollar and falling government yields, cryptos are currently persona non grata for speculators. Crypto investments are seeing outflows and the overall momentum or interest in the space has stalled. Until crypto traders see a clear positive development on the regulatory side, Bitcoin may remain stuck in a consolidation, currently trying to find the lower limits of the trading range.
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With more than 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-date intermarket analysis, coverage of geopolitical events, central bank policy and market reactions to corporate news. His particular expertise lies across a wide range of asset classes, including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of the leading forex brokers, 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 financial 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 respected global news outlets, 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.
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