Commodities and Cryptos: Oil sinks on Delta Variant concerns, Gold softer, Bitcoin

Oil

COVID-19 variant concerns are dragging down crude prices. The robust crude demand outlook is starting to take a hit as many countries continue to struggle with the more infectious Delta variant. Even the US is seeing a surge as low vaccinated states are behind the 47% increase in cases over the previous week. England will end lockdown rules on July19th even though they might see a surge in infections leading to 1,000 to 2,000 people being admitted to the hospital daily till the peak in August. This pandemic once again feels far from over and that is dragging down optimism for a robust crude demand story going forward.

Energy markets are also expecting several days of posturing amongst OPEC+ members. Saudi Arabia and the UAE will eventually be forced to reach an agreement on boosting production otherwise, they risk ending stable prices going forward.

WTI crude seems vulnerable for further weakness given how much prices rallied over the past few months.

Gold

Gold prices softened on low trading volumes as the dollar firmed up on safe-haven flows. Bullion traders are waiting to see if inflationary pressures continue to simmer across the economy. Right now the gold market is all about the upcoming US CPI data and not so much safe-haven flows from the spread of the Delta variant.

Gold should remain stuck around the $1800 level until investors decide whether or not Treasury yields will remain flattish. Gold prices could eventually strongly rally if Wall Street begins to believe once again that longer-term structural drivers will make it difficult for rates to go up. Gold has massive resistance around the $1,835 level, which on a break could pave the way for a run towards the $1,870 level.

Bitcoin

A strong dollar and some freeing up of cash ahead of a busy week saw cryptocurrencies weaken across the board. News of Plan B passports and concerns of El Salvador’s Bitcoin adoption didn’t provide much of a catalyst to start the trading week. Bitcoin remains confined to its $30,000 to $40,000 trading range.

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