Oil drifts lower, Gold back at $2000, Bitcoin resilience

• Oil lower given the risk-off tone on Wall Street
• Gold lower as dollar rallies as Fed rate hike bets get locked in
• Bitcoin rallies back towards upper boundaries of key range

Oil

Crude prices are drifting lower as most energy traders are still on the sidelines until we get a clearer picture on the global growth outlook.  There have been a lot of headlines but nothing is moving oil today as prices appear content hovering above the $80 given all the supply challenges. 

Rising tensions between China and the US are not unnerving investors. Over the weekend, China launched military drills around Taiwan. The US also deployed a guided-missile submarine to the Middle East. It seems Iran nuclear deal talks have completely stalled and now the US is trying to stabilize that region as they have accused Iran of targeting drone strikes on oil tankers. 

The short-term crude demand outlook will soon be clearer. This week, we will find if the US economy is taking the steps into the recession pool or if it is going to do a cannonball into it.  Wall Street should have a strong handle on the trajectory of the economy after it gets a pivotal inflation report, the latest retail sales numbers, and bank earnings along with their respective outlooks for the American consumer. 

Gold

Gold is declining as Wall Street becomes more confident that the Fed will go ahead and continue raising rates.  With much of Europe on holiday, it seems demand for bullion has completely stalled.  The dollar was ripe for a short-term bounce and that is also helping drag down gold.  Gold should continue to hover around the $2000 level, but if dollar strength remains, key support might come from the $1970 region. 

Bitcoin

Despite broad weakness across most risky assets, Bitcoin continues to hover above the $28,000 level.  It seems Bitcoin Hodlers remain unfazed that the Fed will likely deliver one more rate hike and that the US economy is headed towards a recession this year.  It seems many traders are convinced the dollar’s days are numbered as it will slowly lose some of that preferred reserve currency status and that crypto will be one of the beneficiaries.

It is somewhat impressive that Bitcoin is slightly higher on a day that has stocks, oil, gold, and high-beta currencies all down around a half a percentage point.  Bitcoin’s ceiling remains the $30,000 level and how it behaves once it trades north of it will determine if the next major bull phase is upon us.  

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