Commodities and Cryptos: Oil market will remain very tight, Gold rallies as real yields tumble, Bitcoin rallies

Oil

Crude prices initially climbed higher as forecasts for a colder November has energy traders bracing for a very tight market that will be met unprecedented demand this winter.  Despite the short-term crude demand outlook, OPEC+ does not appear willing to ease the current shortfalls.  OPEC+ knows that if a new COVID variant emerges or if the situation across China and Europe deteriorates further the demand outlook could take a big hit.   

This oil market will remain tight and that should mean a headline or two away from $90 oil.  Optimism for a revival of the Iran nuclear deal seem to be entering a critical phase that could either hint at possible sanction relief at some point past the winter or increased tensions that would keep Iran output at low levels. 

Oil prices rallied from session lows after reports that Russia wants OPEC+ to stick to a gradual output increase plan on November 4^th.  OPEC+ has clearly shown their cards, this market will remain tight throughout winter and probably the first half of next year.

Gold

Wall Street got a little too aggressive in pricing 2022 Fed rate hikes last week, and now that popular trade is unwinding, which is great news for gold.  Gold prices are back above $1800 as investors worry about longer-lasting inflation and as Europe and Asia continue to battle COVID. 

Gold could get its groove back if investors start to price in only one and not two rate hikes next year.  Right now, everything screams inflation, but that could change quickly well before the Fed needs to seriously consider raising rates.  After the first quarter, the Fed will be well into tapering its asset purchases and the global chip shortage should be improving, and the prospect of warmer weather should be alleviating the global energy crunch.  The global economic recovery might be vulnerable in the short-term, but when tapering is almost over, pricing pressures will be easing and the Fed may lose urgency in raising rates. Gold could face resistance at the $1840 level, with the $1,875 level providing major resistance. 

Bitcoin

Bitcoin and the other top cryptocurrencies are all higher after Elon Musk tweeted that he owns Bitcoin, Ethereum, and Doge! His latest crypto endorsement also came along with his standard warning not to bet the farm on crypto.      

Bitcoin and futures exchange-traded fund products are rebounding today as risk appetite holds firm on Wall Street.  Bitcoin continues to attract new investors, but the necessary whales required to send prices further into uncharted territory have yet to commit. 

It would be healthier for Bitcoin to consolidate between the $60,000 and $65,000 level before pushing higher.

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