Oil rises, gold and bitcoin eye Fed

Oil running on fumes

Oil is continuing to make steady gains, with Brent moving above USD51.00 to its highest level since March before pulling back. Similarly, WTI came within a whisker of USD48.00 today before paring gains. It seems both are running on fumes after a remarkable run since early November, when we started getting good news on the vaccines, which are now being rolled out in the UK, Canada and the US.

With OPEC+ stepping in earlier this month to restrict new production which had been planned to take place from January, prices have remained supported and the group has committed to remaining reactive going forward which will continue to support crude through a potentially tough few months.

Gold rallying ahead of Fed

Gold is in positive territory and once again above USD1,850, with traders seemingly not shy ahead of the Fed decision. More bond buying should be a positive stimulus for gold, which has struggled in the aftermath of all the vaccine announcements. The dollar has remained under pressure but that’s only limited the downside in the yellow metal, which seemingly has one eye on the long end of the yield curve.

Should the Fed opt to hold today, it could be nasty for gold, barring some extremely dovish forward guidance. We may not see it break the November lows but it may be headed in that direction. The markets appear to be pricing in some action. Should the Fed deliver then we could see a decent rally and test of USD1,900 once more, bringing an end to the post-summer correction.

Bitcoin eyeing Fed bump to USD20,000

It will be interesting to see how bitcoin responds to the Fed, having rallied strongly into the announcement. There is clearly a view in the community that all of this central bank easing provides a bullish case for bitcoin and with the crypto closing in on new record highs and, importantly, USD20,000, this could well be the point when it explodes higher into uncharted territory. It could be a lovely holiday period for bitcoin and the other cryptocurrencies that ride the wave higher.

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