Commodities and Cryptos: Oil tumbles on strong $ and as US considers options, Gold thanks BOE and Fed, Bitcoin endorsed by Adams

Oil

Crude prices are sharply lower after the Biden administration signaled the US will consider a full range of tools to stabilize oil prices.  This was an easy and quick OPEC+ meeting on output.  At no point did OPEC+ consider changing their output strategy, which was completely the message they had going into today.

Saudi Arabia anticipates that the oil market deficit will end in the first quarter of next year and that is largely due to concerns over the short-term crude demand outlook.

The selloff in WTI crude won’t last long as the oil market is still in deficit and whatever response the US has will likely be temporary relief and nothing that brings US production back to the levels seen under the Trump administration.  The mid-$70s should prove to be a very attractive entry for energy traders.

Gold

Gold prices got a trifecta of central bank action that is revitalizing bulls: First a dovish Fed taper, then a surprise hold on interest rates by the BOE, and as surging inflation forced the Czech National Bank to raise borrowing costs more than expected .  Major economies are turning dovish as developing countries scramble for inflation-hedges.

Even as US stocks continue to make fresh records, fixed income traders are sending Treasury yields across the curve sharply lower.  Recently, tumbling Treasury yields would lead to dollar weakness but that is not happening today.  The FX market would have you believe that Wall Street is having a bad day, as the Japanese yen is the best performing currency, with the dollar in second place.

If the Fed and BOE are both in the early stages of a policy mistake, that is great news for bullion.  A scramble to tighten, would ultimately choke growth and lead to significant safe-haven demand for gold.

Cryptos

The Shiba Inu bubble is popping.  This parabolic move lasted a lot longer than it should have, but the end of the Shib craze should help retail to focus back on Ethereum and Bitcoin.

NYC Mayor Eric Adams tweeted, “In New York we always go big, so I’m going to take my first THREE paychecks in Bitcoin when I become mayor. NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait!”  This is a positive story for Bitcoin, but will unlikely move it off session lows.  Adams is unlikely to lead the next wave of mass adoption with Bitcoin.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.