Gold and Bitcoin rally as Bank worries return; Oil lower

• Oil getting crushed as the demand outlook continues to deteriorate
• Gold surges as Fed hike bets no longer fully price in a quarter-point rate rise
• Bitcoin finds some tentative support at the $27,200 level

Oil

Oil prices slumped as the dollar rallied and crude demand signals remained mostly bearish as Halliburton signaled that customers are clearly motivated to produce more oil and gas. The one positive news for crude was the upbeat outlook from JetBlue on robust demand trends in the second quarter. ​ Energy traders aren’t buying this dip until they have clear signs that the sky has stopped falling. ​ Concerns about China’s recovery aren’t going away until we see strong signs crude demand is improving. Unless we see risk appetite quickly return to Wall Street, it could get uglier for crude prices. ​

Gold ​
​Gold initially struggled as the dollar staged a comeback as investors went into de-risking mode. Gold is still a safe-haven, but today it let the dollar have its day in the sun for a little while. Debt ceiling progress took away some of gold’s appeal, as insiders view President Biden’s re-election announcement as giving a boost to Speaker McCarthy’s chance of getting this bill passed by his fellow republicans. Gold is still near the $2,000 level and if the bloodbath on Wall Street gets uglier, investors will eventually pile back into the precious metal. ​

Everything changed for gold once Wall Street lost confidence in First Republic Bank. Gold is still a key safe-haven trade for Wall Street and now that banking jitters are back, gold is ready to rally.

Bitcoin

Bitcoin was initially lower as Wall Street takes some risk off the table. ​ Bitcoin is still showing it is a risky asset as it is in the red along with all the other major asset classes. ​ Earnings risk, more Fed tightening, and regulatory fears are still weighing on cryptos. ​ The return of banking fears helped send some flows Bitcoin’s way.  Bitcoin is higher by 0.9% on the session after news that First Republic is fighting for survival.

Coinbase made the decision to sue the SEC for clarity on crypto regulations in the US. ​ This could put pressure on the SEC to make a decision a little sooner than they were anticipating. ​ Coinbase clearly wants to be able to operate in the US and they are hoping this lawsuit will give them the clarity a lot sooner so they can make the right business decision. ​

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