Oil and Gold lower on strong dollar, Crypto down as banking turmoil eases

• Energy traders await Key China data
• Gold down but not out
• Crypto down on strong dollar and easing banking turmoil

Oil

Crude prices are in trouble as the dollar appears poised for a major rebound as the Fed might be in position to do a lot more tightening. The economy is showing resilience and while normally that is good news for the crude demand outlook, that is disrupting calls for a peak in Fed tightening. 

The oil market will soon have to deal with recession fears but for now it should be a choppy trade.  WTI crude could fall towards the $80 level and even below if the king dollar trade heats up over the next couple of days. The risks of $100 oil still remain on the table, but current positioning supports a pullback here unless China’s economic impresses.

This week is all about China and if their major economic data points to an even more robust reopening from COVID, oil’s bullish rally could quickly get right back on track. 

Gold

Gold got chopped down after Treasury yields surged as the risks of more Fed tightening grow following better than expected economic data and earnings.  Fed speak is also supporting higher rates and that narrative won’t change anytime soon.  Fed’s Barking noted that he wants to see more evidence that US inflation is easing back to their target of 2%. 

Gold’s path towards record territory is still there, it just might take a little while longer.  There is too much earnings, political, geopolitical, and central bank risk on the table. Only a couple of risks need to rattle markets to trigger safe-haven towards gold. 

Cryptos

Cryptos are losing some appeal as banking turmoil risks appear to be disappearing. Fed lending to banks continues to ease and earnings has not revealed any major strains with the early banks that have reported. Also dampening the appeal for crypto is the surge behind Treasury yields, which is dampening the appeal for most risky assets.  It looks like ‘one and done’ calls for the Fed were a bit too optimistic and the risks of the Fed over tightening will remain on the table. 

Bitcoin looks like it might be consolidating here, possibly settling on a new range between the $26,500 and $31,000 region. 

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