Oil rally hits a wall, Gold shines, Keep your eyes on Bitcoin this Friday

• Commodities have been supported by a weaker dollar
• Shortened Trading Week impacting flows

Oil rally runs out of steam

The crude rally hit a brick wall as market pessimism grows that US economy is headed towards a recession.  Yesterday was all about the shock from the surprise OPEC+ production and today is about a weakening economy and growing consensus that a recession will happen later this year.  This is a tough shortened trading week given Good Friday holiday for energy traders.  A pivotal nonfarm payroll report will be released on Friday and it will be difficult to gauge the complete reaction to the vital reading on the health of the US economy.

WTI crude should find a home around the $80 level but if recession fears become more entrenched, more of the OPEC+ surprise production cut gains could be given back.

Gold hits a 13-month high

Gold can’t be stopped.  A weakening economy continues to drive safe-haven flows towards gold.  The JOLTS report supported the view that economy is steadily weakening its way towards a recession.  Gold investors now need to see further evidence that the service sector part of the economy is slowing and that could help the big rally continue.

Gold has its eye on record highs and that it might not take much to get there.  If recession expectations continue to grow for the second half of the year, gold should have a path towards the $2100 level.

Bitcoin rises 2.0%

The Bitcoin bear case is growing but if the dollar keeps dropping alongside Treasury yields, it might not matter. Bitcoin is hovering around the high end of its recent range as crypto traders await to see how it will benefit from the current banking crisis. Bitcoin price action should closely be watched at the end of the week as many markets will be closed for the Good Friday holiday.  Bitcoin has had a key price barrier at the $30,000 level and if Friday’s NFP report shocks to the downside, we could see high frequency trading systems and algos try to take advantage of any momentum opportunities.

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