Commodities and Cryptos: Oil slumps on dollar and virus worries, Gold shines, Bitcoin lower

Oil

Crude prices were lower on both a strong dollar and as omicron concerns grow as the current virus surge will likely lead to some Americans to cancel holiday travel plans. Covid news may continue to be a drag for oil prices for the rest of the year, but prospects of $100 oil at some point next year will lead to some buying on every critical support level. 

Iran’s lead negotiator Ali Bagheri Kani said, “we have made good progress this week.” Iran’s nuclear talks have concluded the seventh round and will likely continue, but expectations for an imminent breakthrough are far too early.  Additional Iranian crude barrels hitting the market won’t be happening anytime soon.   

WTI crude appears poised to hover around the $70 area.  

Gold

Gold had a great week after a hawkish FOMC decision and dot plots triggered a flattening of the Treasury curve, safe-haven flows improved on omicron worries, all while Bitcoin continues to weaken.  Gold is back above the $1800 and how it performs for the rest of the year may be tricky given the thin market conditions that will shortly settle in. 

Omicron remains the biggest risk to the outlook and whether that leads to panic selling of risky assets or triggers some safe-haven flows might have gold trade between the $1775 and $1850 trading range for the rest of the year.   

Bitcoin

Bitcoin selling pressure remained in place after reports Russia’s central bank may look to ban new crypto investment.  Today, Russia central bank governor Nabiullina said “we’re skeptical on crypto, to put it mildly. Bitcoin traders are hesitant to buy the dip just yet until perhaps one last push towards the low 40s. 

Bitcoin is known for exaggerated moves during illiquid conditions and that will be pretty much the rest of the year. If risk remains the dominant theme for the remainder of the year, the entire crypto space could be vulnerable to another 5-10% of weakness. 

Given this year’s outperformance with several altcoins, many traders will closely pay attention to if Bitcoin’s dominance continues to fade.  Bitcoin still has around 40% of the total crypto market cap, while Ethereum is near 20%.  Many traders are gravitating to other coins such as Avalanche, Solana, Polkadot, and Hedera.  If the focus primarily falls on altcoins at the beginning of next year, it may take Bitcoin a long time to return back to record high territory.  

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.